mid2 review

mid2 review - Econ 100B, B00, Fall 2008 Prof. Jacobsen...

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Unformatted text preview: Econ 100B, B00, Fall 2008 Prof. Jacobsen Thursday Review Session TA: Alex Sawyer identical products free (costless) entry and exit of firms all actors know all prices low transaction costs (also: no externalities) Perfect Competition Perloff Chapters 8 and 9 Which of the following best describes the shape of the demand curve for a single firm in a perfectly competitive industry? a. The demand curve is downward sloping. b. The demand curve is vertical. c. The demand curve is upward sloping. d. The demand curve is horizontal. e. None of the above Which of the following best describes the shape of the demand curve for a single firm in a perfectly competitive industry? a. The demand curve is downward sloping. b. The demand curve is vertical. c. The demand curve is upward sloping. d. The demand curve is horizontal. e. None of the above Why are sellers price takers in a perfectly competitive market? a. There are only a few sellers, and so they have the power to take whatever price they want. b. Sellers in a perfectly competitive market have the power to influence price by colluding with one another and using quotas to limit overall market output and thus raise price. c. Individual buyers in a perfectly competitive market have the power to influence price, and thus can impose prices and other conditions on powerless sellers. d. A seller takes the price determined in the market, it sells a homogeneous product, and buyers and sellers are fully informed. e. None of the above Why are sellers price takers in a perfectly competitive market? a. There are only a few sellers, and so they have the power to take whatever price they want. b. Sellers in a perfectly competitive market have the power to influence price by colluding with one another and using quotas to limit overall market output and thus raise price. c. Individual buyers in a perfectly competitive market have the power to influence price, and thus can impose prices and other conditions on powerless sellers. d. A seller takes the price determined in the market, it sells a homogeneous product, and buyers and sellers are fully informed. e. None of the above How to maximize short-run profits in a Perfectly Competitive market? Output Decision: ! "# "$ % MC MR q q q dq q dC p dq q dC dq q dR dq q d FOC q C pq q C q R q *) ( *) ( *) ( *) ( : )] ( [ max )] ( ) ( [ max ) ( max = ! = " ! = ! " = " = # # Important Check! A sufficient condition that the FOC gave you a Global Maximum (as opposed to?): SOC: In perfect Competition, this condition is just: i.e., a Convex cost function = increasing Marginal Cost = Decreasing Returns to Scale *) ( 2 2 < dq q d !...
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mid2 review - Econ 100B, B00, Fall 2008 Prof. Jacobsen...

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