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Midterm 2 Topics - Announcements Exam Wednesday ch 7-10 40...

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Announcements Exam Wednesday – ch 7-10 40 questions HW for ch 10 due tonight – 2 parts (counts as 1 HW) Office hours: Today 2-3:30, Tuesday 2- 4:30.
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Input: Minimizing Costs Land, Labor, Capital, Entrepreneurial skill Marginal productivity Production technology (minimize costs) Law of diminishing returns (in the short run). Choose technology and inputs to minimize costs for each level of output.
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Firms, production and costs (ch7) Firms maximize profits (TR-TC) Accounting vs. economic costs (implicit and explicit) Costs (TC, FC, VC, AFC, AVC, ATC, MC ) Know how all the costs relate to each other (e.g. TC=FC+VC, MC=change in TC/change in Q, MC hits AC at minimum, etc. Marginal Product, average product Technologies and input costs
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Short Run Costs 4 of 31
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5 of 38 MONOPOLISTIC COMPETITION AND OLIGOPOLY Characteristics of Different Market Organizations
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Perfect Competition (ch8) 1. “price takers”. 2. Homogeneous products. 3. Everyone has access to full information. 4. Unrestricted entry and exit to the market 5. Prices not fixed or regulated by the state Be familiar with “picture” of the firm. Flat demands curve for individual firm P=MC (MR=MC) gives profit – maximizing quantity (also gives us the firm’s supply curve) P=MC is efficient from society’s standpoint
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