Midterm+3+Topics

Midterm+3+Topics - Announcements Exam Wednesday (chs. 11-18...

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Announcements Exam Wednesday (chs. 11-18 plus game theory) HW for ch 18 due tonight Office hours today 2-4 and Tues. 2-4pm or by appointment. Bring a calculator to the exam!!
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Overview of Topics Ch 10 – game theory Ch 15 – Antitrust Ch 11 – Input markets (general) Ch 12 – Labor markets Ch 13 – Capital markets Ch 14 – Structure of the firm and Imperfect Information Ch 16 – Public goods and public choice Ch 17 – Externalities Ch 18 – Income inequality
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Game Theory (ch 10) Players, strategies, payoffs Payoff matrix contains all relevant info. Be able to find “equilibrium” Dominant strategy – do no matter what other player does. Nash Equilibrium Maximin strategy – avoid bad payoffs Tit-for-tat strategy in repeated games.
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4 of 38 Game theory Payoff Matrix for Advertising Game
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Antitrust Regulation of natural monopolies If set P=MC – firm loses money If set P=AC, firm earns zero economic profit – but not quite socially efficient FTC and DOJ monitor competitiveness in US industries Use HHI to determine whether a merger should be challenged (share 2 +share 2 +…) If under 1000 – never challenged, if over 1800, almost always challenged
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Input markets Land, Labor, Capital, Entrepreneurial skill Marginal productivity Production technology (minimize costs) Law of diminishing returns (in the short run). Hire input until MP per dollar is the same for al inputs A A K K L L P MP P MP P MP = =
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Input markets (ch11-12) Demand for labor (derived) Marginal productivity
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This note was uploaded on 08/30/2011 for the course ART 3514 taught by Professor Dhbannan during the Summer '03 term at Virginia Tech.

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Midterm+3+Topics - Announcements Exam Wednesday (chs. 11-18...

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