BECN CH 1- Limits, Alternatives, and Choices
The economic way of thinking
Economic perspective- viewpoint that envisions individuals and institutions making rational
decisions by comparing the marginal benefits and marginal costs associated with their act
BECN 150 CH 8
Perfect competition in the short run
Four market structures
Perfect competition- a market structure in which a very large number of firms produce a
Monopoly- a market structure in which one firm is the sole seller of a p
BECN 150 CH 9
Perfect competition in the long run
The long run versus the short run in perfect competition
Profit maximization in the long run
Entry and exit onlyIdentical costs- all firms in the industry have identical cost curves
CH 3- BECN 150
Price, Quantity, and Efficiency
Demand- a schedule or curve that shows the various amounts of a product that consumers are
willing and able to purchase at each of a series of possible prices during a specified period of
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Monopoly- an industry in which one firm is the sole producer or seller of a product or service for
which no close substitutes exist
o They are price make
o Blocked entry- economic, technological, legal or some other type of barrie
BECN 150- CH 7
The firm and the costs of production
Economic cost- a value equal to the quantity of other products that cannot be produced when
resources are instead used to make a particular good
Explicit and implicit costs
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Monopolistic Competition and Oligopoly
Characteristics of monopolistic competition
Monopolistic competition- a market structure in which a relatively large number of sellers
produce differentiated products
o Small market shares
o No collus
Chapter 4 (Conti)
A demand-side market failure
o Demand curves do not fully reflects consumers Willingness to pay for a good or service.
o Failure to reflect consumers willingness to pay!
A supply-side market failure
What is Consumer Surplus?
1. What is market?
Interaction between buyers and sellers
Markets may be;
Price is discovered in the interactions of buyers and sellers
2. What is demand?
- Demand is schedule or a curve
Amount consumers willing and able to pu
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Market Failures: Public Goods and Externalities
Market Failures in Competitive Markets
Market failure- when markets fail to function properly, whether by overproducing, under
producing, or failing to produce economically desirable goods
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Price elasticity of demand
Price elasticity of demand- a measure of the responsiveness of buyers to a change in the price of
a product or resource
The price of elasticity coefficient and formula
Ed= percentage change in quantity
CH 2- BECN 150
The Market System and the Circular Flow
Economic system- a particular set of institutional arrangements and a coordinating mechanism
for producing goods and services
o Determines what goods are produced, how they are produc
CHAPTER 3 and 5
Demand and Supply
BECN 150 - CHAPTER 3 and 5
This Chapter Will Enable
You to Understand and Explain:
the concept of demand
the concept of supply
the term market
the concept of equilibrium price and quantity
the causes and effects of a ch
PROBLEM SET CHAPTER 7
1. The difference between total revenues and total costs when all explicit and
implicit costs are included is a firms:
A. economic profit.
B. accounting profit.
C. opportunity profit.
D. average annual profit.
2. Marginal cost is def
Lecture 1 Notes
We do not have enough resources available to produce all the goods and services that
we would like to consume.
Society must allocate limited productive resources among competing uses
Scarcity makes it necessary to choose.
Chapter 4 - Elasticity and Its Application
The Price Elasticity of Demand
The price elasticity of demand measures the change in the quantity demanded in response
to a change in market price (i.e., a movement along a demand curve).
Price elasticity of dema
Chapter 7 Lecture Notes
Costs and the Supply of Goods
1) Explicit, Implicit and Total Costs
Demand reflects the preferences of consumers and how those preferences influence the
allocation of final goods.
Costs of production influence the use of resource
Lecture 2 Notes
The Production Possibilities Curve
Is represented by points outside the curve
Is represented by points on the curve (efficient) and points inside the curve (inefficient)
Is represented by the downward slope