Class+11+Partial+Equilbrium+I+_Allocations_+after-1

Class+11+Partial+Equilbrium+I+_Allocations_+after-1 -...

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Partial Equilibrium I: Allocations and Feasibility
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Results ! Average/ Median: 199.6/200 points out of 300 ! Letter “Grades” are indicative only. Final curve is likely to be slightly more favorable extra credi likely to be slightly more favorable ( extra credit ) ! Post Exam Review Session: Tuesday, Feb. 9, 7-9pm in CHEM 1210 ! Talk to me or your GSI about strategies for studying / improving (Send me or your GSI an email to make an individual appointment). ! I have additional OH today, M 5:15-6:00pm, Lorch 339. (Regular: W, 5:15-6:00pm.) Exam: we’re proud of you…
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Model of Competitive Markets Markets determine Allocations: Who gets what? Evaluate Allocations: What is a ‘good’ allocation? Is the competitive allocation ‘good’? Complications: Externalities, Monopoly, Public Good Provision Syllabus
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One Firm in the Market: Producer Surplus and Profits
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x Fundamental Theorem of Calculus The general form: ! " ! " 0 0' f x f f dx $ % # Total costs are equal to fixed costs plus the integral over marginal costs: ! " ! " ! " 0 q c q c c q dq $% # The integral over marginal costs is equal to the variable cost Variable Costs Fixed Costs ! " ! " ! " 0 ( ) 0 ' q VC q c q c c q dq $ & $ # The integral over marginal costs is equal to the variable cost: Variable Costs
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Example I Price ! " ! " ! " 11 00 1 ' 2 1 VC c q dq q dq $ $$ ## !" 2 1 c q q $ % Example I: Total Costs: Variable Costs: 3 4 '2 c q q $ ! " 2 MC q q $ 1 2 0 1 2 0 q Variable Costs: Area under the marginal cost curve Variable Costs
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3 4 Price ! " 2 S P q q $ Producer Surplus = Revenue minus Variable Costs 1 2 At a price p , supply is S Example I: 0 1 2 0 q Producer Surplus at a price p 0 PS p pq c q c $ & & ! " q Q p $ Total Costs: What is the producer surplus at p = 2?
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This note was uploaded on 12/08/2010 for the course PYSCH 111 taught by Professor Malley during the Spring '08 term at University of Michigan.

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Class+11+Partial+Equilbrium+I+_Allocations_+after-1 -...

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