Micro 14-18, 20 - Final

# Micro 14-18, 20 - Final - ECO 251 Study Guide for Final...

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ECO 251 Study Guide for Final Exam Chapter 14 1 – 2. Table on page 291 1. Price and quantity sold relationship represented in the table show a “competitive market”:(Table 1 on the Page291) 2. If firm doubles the output from 3 to 6 units ______________________.(Table 1;Page 291). 3. In a competitive market no single producer can influence the market price because “many other sellers are offering products that are essentially identical”(Hint: Read below THE MEANING OF COMPETITION; Page 290). 4. Total profit for a firm is calculated as “(Price minus Average Cost) multiplied by (Quantity of Output)”: (Profit= P – ATC. Qs) 5. Short run supply curve for a firm in perfectly competitive market is “the portion of marginal cost curve that lies above the average variable cost”(Figure 3 on the Page297). 6. When perfectly competitive firm decides to shut down it is most likely that “price is below the firms average variable cost”: (Figure 3 on the Page297). 7. Definition of Sunk Cost: Page 296. 8. At profit maximizing level of output “Marginal Revenue = Marginal Cost”:(Figure 1 on the Page 294). 9. Which of the following represents firm’s long run condition for exiting the market? “Exit if Price < Average Total Cost”: (Figure 4 on the Page 299). 10. When firms in perfectly competitive market face the same costs in the long run they must be operating “at their efficient scale”: (Figure 7 on the Page303). Chapter 15 1. When a firms average total cost curve continually declines the firm is a “natural monopoly”:(See Graph on page 314). 2. Fundamental cause of monopolies is “Barriers to entry”:(Second sentence of the first paragraph below WHY MONOPOLIES ARISE on the Page 312). 3. For a profit maximizing monopolist “Price > Marginal Revenue = Marginal Cost”(Page 320). 4 - 6. Questions on graph – similar to graph in study guide on page 238(Study Guide; Unit Three on the Blackboard, Figure 5;Page321 on the Textbook). 4. Find total revenue. Formula is (Price x Quantity Sold) 5. Find total cost. Formula is (Average Total Cost x Quantity Sold) 6. Find total profit. Formula is (Price minus total average cost) x (Quantity sold)

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7. Question on graph. Which area represents deadweight loss due to monopoly pricing?( Page 325 Figure 8). 8. One problem with regulating a monopolist on the basis of cost is that “it does not provide an incentive for a monopolist to reduce its cost”:( Page 336, Figure 10). 9. Antitrust laws allow the government to “all the above”:( Read everything
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## This note was uploaded on 10/22/2011 for the course ACCT 3551 taught by Professor Brown during the Spring '11 term at UNC.

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Micro 14-18, 20 - Final - ECO 251 Study Guide for Final...

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