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3.12 LecNotesA

# 3.12 LecNotesA - Admin Wednesday,February27,2008 5:50PM ,'s...

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If there are any discrepancies, go with Professor Foster's For example, in analyzing the effect of change in demand between LR and SR, he doesn't talk about the AVC. So you shouldn't either in the final. (Just skip that step in my notes I was trying to give you intuition why firms drop out and you should be fine.) Go thru TOP6 #3 again Follow up questions from last class now that the professor went over TOP 6? TOP 7. Will go over Problem 1 and 2. Will go over the rest if Professor Foster go over the monopoly notes. (Chap 12 Pg 263 273) Know the curve and charts well. At the very least you should be able to do the old exams quickly. Remember the topic 3 materials. Finals Admin Wednesday, February 27, 2008 5:50 PM 0312 Page 1

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PRACTICE PROBLEMS [1] Problem 1. Monopoly Figure A shows the cost and linear demand curves for a uniform-price monopolist. A. Carefully draw the marginal revenue curve. B. Locate profit-maximizing output X* and price P*. C. Draw the π rectangle. Problem 2. Monopoly Table A at right shows a monopolist s total revenue and total cost at various levels of output X. Table A XT R MR TC MC 0 \$0 //////// \$ 200 //////// 20 \$1,960 \$98 \$1,260 \$53 40 \$3,840 (3840-1960)/(40-20)=94 \$2,460 (2460-1260)/(40-20)=60 60 \$5,640 90 \$3,780 66 80 \$7,360 86 \$5,500 86 100 \$9,000 82 \$7,260 88 120 \$10,560 78 \$9,100 92 140 \$12,040 74 \$11,000 95 A. Estimate marginal revenue and marginal cost and fill in the blanks in the table.
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3.12 LecNotesA - Admin Wednesday,February27,2008 5:50PM ,'s...

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