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3-27-09 - Microeconomics Class Notes EXAM MATERIAL All of...

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Microeconomics – Class Notes – 3/27/09 EXAM MATERIAL: All of chapter #6 Chapter #7 Chapter #8 (just what is covered in class today) Monday – Guest Speaker Wednesday – Question and Answer session before Exam on Friday CHAPTER #8 – Profit Maximization Profit = TR – TC To maximize profit The outcome we get is MR = MC Marginal Cost – the cost of producing the last unit of output IN-CLASS WORKSHEET
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PERFECTLY COMPETITIVE MARKETS: Promotion in perfectly competitive market – no advertising – when the products are identical, they will be bought either way. There is advertising for the entire industry, but not for just one individual brand Based on the structure of the market, you can predict what the conduct of the firm will be. Allocative Efficiency – Are there any additional gains from trade? Being parsimonious with resources If all of the gains of trade have been exhausted, then the firms have reached allocative efficiency.
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