MicroEconomics_2nd study guide

MicroEconomics_2nd study guide - B An increase in a firms...

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Micro-Economics 2 nd exam study guide A. Characteristics: B. pure (perfect competition) I. many buyers II. many sellers III. no seller can influence price C. Monopoly: I. Single seller II. single product III. barriers to entry exist D. Monopolistic competition I. relatively large number of sellers II. differentiated product III. relatively easy entry/exit of firms from industry IV.firms differentiate product through quality and advertising E. Oligopoly I. few firms II. mutual interdependence is evident III. non-price competition occurs F. Purely competitive model I. firm cannot maximize sales II. no 1 firm can influence price III. the firm faces a perfectly elastic demand curve things to remember: A. The most efficient micro-economic industry model tends to be Pure competition
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Unformatted text preview: B. An increase in a firms advertising will most likely increase the cost of the product C. In the long run ALL resources are variable D. to affect cost you must change resource usage level E. It is unrealistic for a purely competitive firm to achieve maximum sales (revenue) F. Marginal revenue must equal 0 in order to maximize revenue (sales) G. a firm achieves excess (economic) profits where price exceeds average total cost H. Marginal cost = Average total cost AND marginal cost must be increasing in order to minimize cost. I. Purely competitive model tends to bring about no firms achieving normal profits over time...
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