Final Exam Review.pptx

Final Exam Review.pptx - Final Exam Review 1 2 3 4 What are...

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Final Exam Review
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1. What are the key assumptions for a perfectly competitive market? 2. What are key assumptions for monopolistic competition? 3. What is relationship between price and MC in each of the above types of market? 4. In what ways, if any, do the demand curves for a purely competitive firm and a monopolist differ? What significance does this have for the price-output behavior of each?
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5. If you are a producer in a perfectly competitive market, why might you try to differentiate your product? Give an example of a company with a differentiated product and how the company benefits. 6. If you are in the local residential lawncare business, what might you do to differentiate?
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7. In the perfectly competitive market, how does the price serve as a signal for efficiency a. for consumers? b. for producers? 8. What is a negative externality? 9. When there is a negative externality (and no regulation), how does the price fail as a signal for efficiency? 10. When there is a negative externality (and no regulation), •. how does the equilibrium price compare to the efficient price? •. how does the equilibrium quantity compare to the efficient quantity? •. Show the market, with pollution externality, for coal-fired electricity with MPB, MSB, MPC, MSC
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10. What is cap-and-trade (tradeable permits) regulation of pollution? 11. What is an emissions tax? 12. Why do economists prefer tradeable permits or an emissions tax to a pollution standard? 13. How does a cap-and-trade regulation promote abatement at lowest cost? 14. How does an emissions tax promote abatement at lowest cost?
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What is price elasticity of demand?
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