Econ%20306%20Final%20Review - Intermediate Microeconomics...

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Intermediate Microeconomics – Econ 306 Midterm #2 Study Guide 1. Can increasing returns to scale (falling AC with increasing Q) continue forever with the right technology? Why or why not? (The correct answer must reference the meaning of opportunity cost) 2. In perfect competition, economic profits tend to equal ____. Explain. 3. What would happen to output if economic profits were positive? Negative? 4. What does a DWL mean conceptually (i.e. what does it represent)? 5. What is the necessary condition for a monopoly (other than a natural monopoly) to exist? 6. What is cost-plus pricing? Do publically owned firms have an incentive to minimize costs? Why or why not? 7. What is the effect of Anti-Trust Legislation on P and Q? 8. Thoroughly explain your answer to #7 9. Explain at least two reasons why lobbying is inefficient. 10. What is a Pure Strategy Nash Equilibrium (PSNE)? 11. Give an example of a prisoner’s dilemma (not involving prisoners) and explain any equilibrium strategies. 12. Give an example of a coordination game and explain any equilibrium strategies. 13. You sell y for $50, it costs $40, your next best option is to sell y for $70 at a cost of $65. What is your economic profit? Accounting profit? 14. What does decreasing returns to scale (DRTS) mean? 15. In the short-run, if the point where MR=MC< AVC, it is best to shut down (t/f) 16. With IRTS, AC is falling as Q increases (t/f) 17. What is a cost of using the firm? 18. Do markets make bigots (racists, sexists, etc) behave like tolerant, enlightened individuals?
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This note was uploaded on 01/28/2011 for the course ECON 306 taught by Professor Omar during the Spring '08 term at George Mason.

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Econ%20306%20Final%20Review - Intermediate Microeconomics...

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