Econ Final Exam Study Guide

Econ Final Exam Study Guide - Econ Final Exam Study Guide...

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Econ Final Exam Study Guide 1. What allows a firm to charge a price greater than MC? (in monopolistic competition) a. Excess demand b. Close Supply c. Brand loyalty 2. A negative externality in a perfectly competitive market will make a. Too much of the good at too high a price b. Too little of a good produced at too little of a price 3. Know definition of non rivalrous and Rivalrous goods a. Which of the following is a non rivalrous good? a.i. Public bathroom – can fill up a.ii. Tickets to a movie – can sell out a.iii. TV show 4. What advertisements might you expect to see in a perfectly competitive industry? In perfectly competitive industry – firms won’t be advertising, but industries will o Trade associations o Advertise overall commodities – not specific goods. a.i.1. Got milk a.i.2. Florida OJ a.i.3. Beef what’s for dinner a.i.4. Pork – the other white meat 5. Market failure: Public goods - people will consume them in excess Non perfect competition – results in market failure because there will be a DWL Long run economic profits – shouldn’t exist, especially in a perfectly competitive market Externalities 6. T-table of goods EXCLUSIVE YE S NO YE S Private Common Property N O Club goods Public
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7. Externalities: An externality is an external cost or benefit of an activity. Ex: pollution – you don’t always won’t to reduce the externality to zero. You want to reduce the externalities so that the MC = Marginal benefit. You might reduce it to zero, but sometimes you don’t. 8. Public park is a ________ good a. Public good 9. Not all government provided goods are public goods. 10. If you have an old school antenna on a TV, if you put that on your TV and you get the TV waves that come through is that rivalrous or nonrivalrous? NONRIVALROUS. Are the people watching the TV excludable or non excludable? NONEXCLUDABLE. 11. Monopolistically competitive firms produce where price = ______ in the long run.
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Econ Final Exam Study Guide - Econ Final Exam Study Guide...

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