Study Guide for Microeconomics Exam

Study Guide for Microeconomics Exam - Study Guide for...

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Study Guide for Microeconomics Exam Topic Question Answer Pure Competition Defining Characteristics Very Many firms Standardized product Price taker Free entry/exit No “non-price competition” Why not Non-Price Competition Because product is standardized Perfectly Elastic Demand Curve Is horizontal line (p. 144) Where will chose to operate in the long run Will settle at the EQ point Long run graph Page 155 Define / where find short run supply curve P=MC, see page 152 Monopoly Defining characteristics One firm Unique product “price maker” Blocked entry Public Relations Where to choose to price if regulated Socially Optimum Price- P=MC Fair Return Price- P=ATC (Breakeven pt.) What causes a natural monopoly Economies of scale are large and the firm can achieve minimum efficient scale Why do people not like monopolies Oligopoly Dominant method that prices will change Through Mutual Interdependence / Game Theory / Price Leadership Difference between Differentiated and non-differentiated oligopolies Some products are standardized (steel, zinc, cement), others are differentiated (cars, houses) and are heavily advertised. Meaning of Product differentiation
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This note was uploaded on 05/08/2008 for the course UNKNOWN 200 taught by Professor Maringer during the Fall '06 term at The University of Akron.

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Study Guide for Microeconomics Exam - Study Guide for...

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