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Unformatted text preview: 02-OCT-2007 Exam: 33 questions, Production relationships and definitions 4 Costs concepts and terms 7 Profit maximization concepts and rules 5 Market structure 2 Profit maximization graph 15 Review: Market structure: o Characteristics of a perfectly competitive market. Sellers are price takers. Anyone can enter the market. Homogenous product no difference in the quality. Production relationships and definitions: o Graph given to us. o Relationships between each set of graphs. o The only curves on the page that are on the test are the one the bottom. o Mirror images of each other. o AP = APP (average physical product). o Stage I of production: AVC decreases. MC decreases. Output increases at an increasing rate. Marginal has to be below the average. Very productive range. o When marginal product reaches its maximum is called the inflexion point....
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- Fall '07