Midterm+3+Topics

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

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Announcements Exam Wednesday (chs. 11-18) HW for ch 18 due tonight Office hours today 2:30-4:30 and Tues. 2- 4:30pm or by appointment. Bring a calculator to the exam!! Half of the questions are from ch 14, 16, and 17
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Overview of Topics 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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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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Demand for labor (derived) Marginal productivity • Marginal revenue product (MRP=MP*P x ) Hire input until the MRP of the input=price of the input. (P=MRP) “Economic rent” = value of the input above and beyond its opportunity cost. A
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Midterm+3+Topics - Announcements Exam Wednesday (chs....

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