HOOct04 - Economics 201, Witte, Tuesday, October 4, 2005...

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Economics 201, Witte, Tuesday, October 4, 2005 New quiz will cover: o On Aplia: Chapter 4, Problem Set II o In TA section you will have to drawing an effective price ceiling or price floor (Note: “effective” need not mean that the effect is a good one) We’ve set up pages were you can post questions or comments about the class at courses.northwestern.edu under Discussion Groups. Office hours o Mark Witte ( mwitte@northwestern.edu ) Tuesday, 2:00-4:00 and Wednesday 9:30-11:30, also by appointment, all in Andersen 311 o Mark Surdutovich ( m-surdutovich@kellogg.northwestern.edu ) Monday, 10-noon, in Andersen 328. o Tim Lin ( ttl@northwestern.edu ) Thursday, 4:30-6:30 in Andersen 328. o Nenad Kos ( n-kos@northwestern.edu ) Wednesday, 1:30-3:30 in Andersen 328. o Jeff Wood ( j-wood@northwestern.edu ) Thursday, 10-noon, in Andersen 328 Microeconomic Problems Economies of Scale I. Minimum Efficient Scale (MES) = The least a firm can produce and still be producing at the minimum average cost per unit made (the “break-even” price for the firm’s output) II. Size of Market and the number of viable firms that will fit: Ratio of “market size” to Minimum Efficient Scale. a. (Market Size)/MES = large => perfect competition. b. (Market Size)/MES = small => oligopoly c. (Market Size)/MES = close to one => monopoly III. “Natural monopoly” – falling AC for any increase in Q. Usually found with
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HOOct04 - Economics 201, Witte, Tuesday, October 4, 2005...

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