Profit Maximization and Competitive Supply
... 3. In long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true? The theory of perfect competition explicitly assumes that there are no entry or exit barriers to new participants in an industry. With free entry, positive economic profits induce new entrants. As thes ...
... 3. In long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true? The theory of perfect competition explicitly assumes that there are no entry or exit barriers to new participants in an industry. With free entry, positive economic profits induce new entrants. As thes ...
PDF
... 4.Under pure altruism, we show that an omniscient regulator who recognizes the reaction to mandatory abatement from the voluntary market will choose an optimal level of regulation that is higher than a naïve regulator who does not recognize the voluntary market reaction. • The marginal benefit of re ...
... 4.Under pure altruism, we show that an omniscient regulator who recognizes the reaction to mandatory abatement from the voluntary market will choose an optimal level of regulation that is higher than a naïve regulator who does not recognize the voluntary market reaction. • The marginal benefit of re ...
Perfect Competition File
... • There are some large wheat farms in the EU, but they are very small in relation to the whole wheat-growing industry. • An individual farm could increase its output many times over without have any noticeable effect on total supply of wheat in the EU. • A single farm is not able to affect the price ...
... • There are some large wheat farms in the EU, but they are very small in relation to the whole wheat-growing industry. • An individual farm could increase its output many times over without have any noticeable effect on total supply of wheat in the EU. • A single farm is not able to affect the price ...
How Markets Work A Change in Demand A Change in Demand
... Factors bring Changes in Demand 3. Income: Consumers’ income influences demand. • When income increases , consumers buy more of most goods and when income decreases , consumers buy less of most goods. • The positive relationship between income and demand for the good is true for most goods, they ar ...
... Factors bring Changes in Demand 3. Income: Consumers’ income influences demand. • When income increases , consumers buy more of most goods and when income decreases , consumers buy less of most goods. • The positive relationship between income and demand for the good is true for most goods, they ar ...
Price Discrimination
... willing to pay $550 per ticket and students willing to pay $150 per ticket. If Air Sunshine could charge these two types of customers different prices, it would maximize its profit by charging two different prices. It would capture all of the consumer surplus as profit. ...
... willing to pay $550 per ticket and students willing to pay $150 per ticket. If Air Sunshine could charge these two types of customers different prices, it would maximize its profit by charging two different prices. It would capture all of the consumer surplus as profit. ...
CHAPTER TWELVE
... 1. What is the least-cost combination of resources to use in producing any given output? 2. What combination of resources (and output) will maximize a firm’s profits? B. The least-cost rule states that costs are minimized where the marginal product per dollar’s worth of each resource used is the sam ...
... 1. What is the least-cost combination of resources to use in producing any given output? 2. What combination of resources (and output) will maximize a firm’s profits? B. The least-cost rule states that costs are minimized where the marginal product per dollar’s worth of each resource used is the sam ...
P - McGraw Hill Higher Education
... Generalized Supply Function Qs h kP lPI mPr nT rPe sF • k, l, m, n, r, & s are slope parameters • Measure effect on Qs of changing one of the variables while holding the others constant ...
... Generalized Supply Function Qs h kP lPI mPr nT rPe sF • k, l, m, n, r, & s are slope parameters • Measure effect on Qs of changing one of the variables while holding the others constant ...
Chap004
... • The number of consumers in the market: – If the number of buyers in the ice cream market increased, the market demand for ice cream would increase. ...
... • The number of consumers in the market: – If the number of buyers in the ice cream market increased, the market demand for ice cream would increase. ...
Exam 1 Version A
... 7. If the law of demand is satisfied for CD’s, when the equilibrium price of CD’s rises from $12 to $15, then, ceteris paribus the a. demand for CD’s will increase. b. quantity demanded of CD’s will increase. c. demand for CD’s will decrease d. quantity demanded of CD’s will decrease. e. both the qu ...
... 7. If the law of demand is satisfied for CD’s, when the equilibrium price of CD’s rises from $12 to $15, then, ceteris paribus the a. demand for CD’s will increase. b. quantity demanded of CD’s will increase. c. demand for CD’s will decrease d. quantity demanded of CD’s will decrease. e. both the qu ...
4-10 Income and Substitution Effects Illustrated: Inferior Goods
... Consumer surplus – the net benefit or gain from consuming one market basket instead of another Total benefit – the total value a consumer derives from a particular amount of a good and thus the maximum amount the consumer would be willing to pay for that amount of the good. Marginal benefit – the in ...
... Consumer surplus – the net benefit or gain from consuming one market basket instead of another Total benefit – the total value a consumer derives from a particular amount of a good and thus the maximum amount the consumer would be willing to pay for that amount of the good. Marginal benefit – the in ...
ECO 202 Micro Principles
... D) not clear because not enough information is given. 2. When the government chooses to use resources to build a dam, these sources are no longer available to build a highway. This choice illustrates the concept of A) a market mechanism. B) macroeconomics. C) opportunity cost. D) a fallacy of compos ...
... D) not clear because not enough information is given. 2. When the government chooses to use resources to build a dam, these sources are no longer available to build a highway. This choice illustrates the concept of A) a market mechanism. B) macroeconomics. C) opportunity cost. D) a fallacy of compos ...
Document
... In a study, 62% of the participants made themselves worse off in order to make someone else worse off. • Is $1 always $1? Sometimes people “compartmentalize” their money. • Coffee Mugs and the Endowment Effect: We value X more highly if we have it than if we do not have it because such behavior at o ...
... In a study, 62% of the participants made themselves worse off in order to make someone else worse off. • Is $1 always $1? Sometimes people “compartmentalize” their money. • Coffee Mugs and the Endowment Effect: We value X more highly if we have it than if we do not have it because such behavior at o ...
Short-Run Costs and Prices
... Qshort . In the long run, however, as the firms adjust all the inputs, output increases to Qlong and the equilibrium price falls to P long . We thus see that market prices are more volatile in the short run than in the long run. This difference is particularly pronounced for industries in which ther ...
... Qshort . In the long run, however, as the firms adjust all the inputs, output increases to Qlong and the equilibrium price falls to P long . We thus see that market prices are more volatile in the short run than in the long run. This difference is particularly pronounced for industries in which ther ...
投影片 1
... (iii) Divergence between private and social costs (benefits): market versus government solutions, illustrated by examples ONLY (N.B. Graphical analysis with illustration of consumer surplus and producer surplus in a demand-supply diagram only. The terminology “Pareto condition” NOT required) ...
... (iii) Divergence between private and social costs (benefits): market versus government solutions, illustrated by examples ONLY (N.B. Graphical analysis with illustration of consumer surplus and producer surplus in a demand-supply diagram only. The terminology “Pareto condition” NOT required) ...
Lecture 4: Supply and Demand
... • The satisfaction buyers derive from the last dollar’s worth of each good equals the last dollar’s worth bought of every other good • The goods are sold at marginal cost, meaning the last dollar spent producing each good brings the same return as the last dollar spent producing the other goods. – L ...
... • The satisfaction buyers derive from the last dollar’s worth of each good equals the last dollar’s worth bought of every other good • The goods are sold at marginal cost, meaning the last dollar spent producing each good brings the same return as the last dollar spent producing the other goods. – L ...
Externality
In economics, an externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit.For example, manufacturing activities that cause air pollution impose health and clean-up costs on the whole society, whereas the neighbors of an individual who chooses to fire-proof his home may benefit from a reduced risk of a fire spreading to their own houses. If external costs exist, such as pollution, the producer may choose to produce more of the product than would be produced if the producer were required to pay all associated environmental costs. Because responsibility or consequence for self-directed action lies partly outside the self, an element of externalization is involved. If there are external benefits, such as in public safety, less of the good may be produced than would be the case if the producer were to receive payment for the external benefits to others. For the purpose of these statements, overall cost and benefit to society is defined as the sum of the imputed monetary value of benefits and costs to all parties involved. Thus, unregulated markets in goods or services with significant externalities generate prices that do not reflect the full social cost or benefit of their transactions; such markets are therefore inefficient.