AP Micro Review Powerpoint
... For the monopolistically competitive firm, what happens to output and profit if there is an elimination of a business license fee (a fixed cost). The correct answer is: --output does not change because the license fee is a fixed cost and does not affect marginal cost. --profit will increase since t ...
... For the monopolistically competitive firm, what happens to output and profit if there is an elimination of a business license fee (a fixed cost). The correct answer is: --output does not change because the license fee is a fixed cost and does not affect marginal cost. --profit will increase since t ...
Microeconomics 1 for ECO Guideline
... - Constrained optimization: making the best (optimal) choice, taking into account any possible limitations or restrictions on the choice. There are two parts: an objective function (the relationship that a decision maker seeks to maximize or minimize) and a set of constraints (restrictions/limits im ...
... - Constrained optimization: making the best (optimal) choice, taking into account any possible limitations or restrictions on the choice. There are two parts: an objective function (the relationship that a decision maker seeks to maximize or minimize) and a set of constraints (restrictions/limits im ...
Measuring Cost: Which Costs Matter? (pp. 213
... User Cost of Capital = Economic Depreciation + (Interest Rate)Ļ(Value of Capital) See the example of aircraft on pp. 225-6. Why do we need this argument? (Profits, revenue, and costs are all in terms of flow, i.e., per period concepts.) ...
... User Cost of Capital = Economic Depreciation + (Interest Rate)Ļ(Value of Capital) See the example of aircraft on pp. 225-6. Why do we need this argument? (Profits, revenue, and costs are all in terms of flow, i.e., per period concepts.) ...
Test answers - December 2001
... operating in the short run; in other words, the price below which the firm no longer completely covers its average variable costs. To find AVC, we subtract fixed cost (FC) from the TC function and divide by q. AVC = 1.5q +4 + 24/q and dAVC/dq = 1.5 – 24q2 . We can set this derivative = 0 to find the ...
... operating in the short run; in other words, the price below which the firm no longer completely covers its average variable costs. To find AVC, we subtract fixed cost (FC) from the TC function and divide by q. AVC = 1.5q +4 + 24/q and dAVC/dq = 1.5 – 24q2 . We can set this derivative = 0 to find the ...
The Firm`s Decisions in Perfect Competition
... The Firm’s Decisions in Perfect Competition The shutdown point is the output and price at which the firm just covers its total variable cost. This point is where average variable cost is at its minimum. It is also the point at which the marginal cost curve crosses the average variable cost curve. A ...
... The Firm’s Decisions in Perfect Competition The shutdown point is the output and price at which the firm just covers its total variable cost. This point is where average variable cost is at its minimum. It is also the point at which the marginal cost curve crosses the average variable cost curve. A ...
exam three – ec201 – summer 2001 - Pdx
... END OF QUESTIONS RELATING TO POLE BARN CONSTRUCTION. 27. If production of an item entails substantial external benefits and no external costs, then market (price) allocation will result in: a. Too much of the good will be produced. b. Too little of the good will be produced. c. The market price will ...
... END OF QUESTIONS RELATING TO POLE BARN CONSTRUCTION. 27. If production of an item entails substantial external benefits and no external costs, then market (price) allocation will result in: a. Too much of the good will be produced. b. Too little of the good will be produced. c. The market price will ...
Chapter 7 - How Firms Make Decisions
... A firm’s owners will usually want the firm to earn as much profit as possible We will view the firm as a single economic decision maker whose goal is to maximize its owners’ profit Why? ...
... A firm’s owners will usually want the firm to earn as much profit as possible We will view the firm as a single economic decision maker whose goal is to maximize its owners’ profit Why? ...
AP MICROECONOMICS is in the beginning stages at our school
... AP MICROECONOMICS SYLLABUS The course is open to students who have demonstrated a willingness and desire to learn more about economics. The course will be taught over a semester. However, the course will be flexed with either AP Macroeconomics or AP Government (depending upon class enrollment), allo ...
... AP MICROECONOMICS SYLLABUS The course is open to students who have demonstrated a willingness and desire to learn more about economics. The course will be taught over a semester. However, the course will be flexed with either AP Macroeconomics or AP Government (depending upon class enrollment), allo ...
9-9 9.3 How Competition Maximizes Welfare
... • How much are consumers helped or harmed by shocks that affect the equilibrium price and quantity? • Shocks may come from new inventions that reduce firm costs, natural disasters, or government-imposed taxes, subsidies, or quotas. ...
... • How much are consumers helped or harmed by shocks that affect the equilibrium price and quantity? • Shocks may come from new inventions that reduce firm costs, natural disasters, or government-imposed taxes, subsidies, or quotas. ...
Take-Home Assignmnet-1
... Much because society is giving up more to produce additional shoes than the shoes are worth. Much because society would be willing to give up more alternative goods in order to get additional shoes. Little because society is giving up more to produce additional shoes than the shoes are worth. Little ...
... Much because society is giving up more to produce additional shoes than the shoes are worth. Much because society would be willing to give up more alternative goods in order to get additional shoes. Little because society is giving up more to produce additional shoes than the shoes are worth. Little ...
Economies of Scale
... domestic market’s prices and decreased in quantity act like a subsidy to the monopolistic firm. The painted area represents a transfer from consumers to producers. The domestic producer has a net gain produced from the diversion of goods from the local market to the foreign market, and the profit re ...
... domestic market’s prices and decreased in quantity act like a subsidy to the monopolistic firm. The painted area represents a transfer from consumers to producers. The domestic producer has a net gain produced from the diversion of goods from the local market to the foreign market, and the profit re ...
Ch05 my ppt
... Why do the wealthy in Manhattan live in smaller houses than the wealthy in Seattle? Why did people turn to four-cylinder cars in the 1970s only to shift back to six- and eight-cylinder cars in the 1990s? Why are automobile engines smaller in England than in the United States? Why are waiting lines l ...
... Why do the wealthy in Manhattan live in smaller houses than the wealthy in Seattle? Why did people turn to four-cylinder cars in the 1970s only to shift back to six- and eight-cylinder cars in the 1990s? Why are automobile engines smaller in England than in the United States? Why are waiting lines l ...
Chapter 8 Costs Functions
... The economic cost of an input is the minimum payment required to keep the input in its present employment. It is the payment the input would receive in its best alternative employment. This cost concept is closely related to the opportunity cost concept (not talking about accounting costs). We usual ...
... The economic cost of an input is the minimum payment required to keep the input in its present employment. It is the payment the input would receive in its best alternative employment. This cost concept is closely related to the opportunity cost concept (not talking about accounting costs). We usual ...
David Besanko and Ronald Braeutigam Chapter 3: Consumer
... Income effect Definition: As the price of x falls, all else constant, purchasing power rises. This is called the income effect of a change in price. The income effect may be positive (normal good) or ...
... Income effect Definition: As the price of x falls, all else constant, purchasing power rises. This is called the income effect of a change in price. The income effect may be positive (normal good) or ...
Chapter-8 - FBE Moodle
... A long-run competitive equilibrium occurs when three conditions hold: 1. All firms in the industry are maximizing profit. 2. No firm has an incentive either to enter or exit the industry because all firms are earning zero economic profit. 3. The price of the product is such that the quantity supplie ...
... A long-run competitive equilibrium occurs when three conditions hold: 1. All firms in the industry are maximizing profit. 2. No firm has an incentive either to enter or exit the industry because all firms are earning zero economic profit. 3. The price of the product is such that the quantity supplie ...
Exam I Fall 2008 with answers
... If we have a growing expectation in the real estate market that the property values in the city of Atlanta will continue to fall in the future then we should observe a) an increase in the prices now because the demand will increase b) a decrease in the prices now because the demand will decrease c) ...
... If we have a growing expectation in the real estate market that the property values in the city of Atlanta will continue to fall in the future then we should observe a) an increase in the prices now because the demand will increase b) a decrease in the prices now because the demand will decrease c) ...
Midterm Questions and Answers, Winter 2006
... 1. (10 points) Suppose good x is high quality navel oranges and good y is medium quality navel oranges. Call the prices in California (where the oranges are grown) px and py , and assume that the high quality oranges are more expensive than the medium quality oranges, px > py . Also assume that the ...
... 1. (10 points) Suppose good x is high quality navel oranges and good y is medium quality navel oranges. Call the prices in California (where the oranges are grown) px and py , and assume that the high quality oranges are more expensive than the medium quality oranges, px > py . Also assume that the ...
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.