microtest4 - Micro Test #4 Lecture Notes 4/16...

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Micro Test #4 Lecture Notes 4/16 Elasticity-unit measure of sensitivity Ice cream @ Dairy Queen with 10 degree increase raise price Income elasticity Airlines-high income elasticity people will travel less with less income Cross-price elasticity substitutes, compliments Q 2 – Q 1 X _P 1 – P 2 _ P 2 – P 1 Q 2 – Q 1 Changes: (slope) (location) *Allocative Efficiency- is the market condition whereby resources are allocated in a way that maximizes the net benefit attained through their use. It refers to a situation in which the limited resources of a country are allocated in accordance with the wishes of consumers. An allocatively efficient economy produces an "optimal mix" of commodities. A firm is allocatively efficient when its price is equal to its marginal costs (that is, P = MC) in a perfect market. Opportunity cost of us making the product supply curve Equilibrium-marginal social benefit (graph) What does it mean to monopolize vs. have a monopoly?
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This note was uploaded on 06/09/2008 for the course E/M E/M 102 taught by Professor Wohl during the Spring '08 term at Gustavus.

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microtest4 - Micro Test #4 Lecture Notes 4/16...

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