All firms face the same rule: Profit is maximized at the Q where MR = Mc.
How you fix the output- MR=MC
Equilibrium will be at MR and MC
P = AR = D
Price on AR
Cost on ATC
What can public policy do about this? Two common answers:
Economics is the study of scarcity and choice.
Individual choice is decisions by individuals about what
to do, which necessarily involve decisions about what not
An economy is a system for coordinating a societys
productive and consumptive activiti
1. Which of the following is a determinant of supply?
a. The Suppliers taste for the products they produce
b. If the product breaks when used too much
c. Prices of the factors of production needed to produce the supply
d. None of the above
2. In a market,
SECTION l l/CLASS QUIZ
Large barriers to entry in the gas station business explain why the two only gas stations
in a small town:
A) can earn an economic profit in the long run.
8) must produce at the minimum average total cost in the long run.
SECTEON EOIADDITIONAL QUESTIONS
Use the foiiowing to answer questions 1-4:
Figure: Short-Run Monopoiy
1. (Figure: Short~Run Monopoly) Examine the figure Short-Run Monopoly. The profit
maximizing rule is sati
SECTION ll/PART Z/CLASS QUIZ
1. Because a monopolistically competitive firm faces a downward-sloping demand curve for its
product, its price Wiil be:
A) equal to marginal revenue.
8) less than marginal revenue.
C) greater than marginal revenue.
D) equal t
SECTION ll/PART Z/DISCUSSION QUESTIONS
1. Product differentiation under monopolistic competition means that each firm:
charges the same price
maximizes profit where M C r: P.
faces a downwardsloping demand curve.
always receives economic p
SECTION 1 l/DISCUSSION QUESTIONS
l. Collusive agreements are typically difficult for cartels to maintain because each firm can
increase profits by:
producing more output than the quantity that maximizes joint cartel profits.
producing less o
What are the four categories of resources? Give an
example of a resource from each category.
Land, labor, physical capital, and human capital are
the four categories of resources. Possible examples
include fisheries (land), time spent working on a
1)Large Number of sellers-PERFECT COMPETITION
Monopoly= ONE SELLER
2) Price maker (Monopoly)
3) Free entry & exit (PC)
4) Many substitutes
Monopolistic competition is a market structure thats a little like monopoly and a little li
Name: _ Date: _
Use the following to answer questions 1-2:
Figure: Computing Monopoly Profit
1.(Figure: Computing Monopoly Profit) Examine the figure Computing Monopoly Profit.
Producing at point N would:
result in MR = MC.
result in positive
Homers possible production plans in the Homer Zone:
If Homer produces this many units Then Homer has enough resources left over to make this
many units of Beer
. Neds Production Possibilities:
If NED produces this
Name: _ Date: _
1.A player's best action (regardless of the action taken by the other player in a game) is
Use the following to answer question 2:
Name: _ Date: _
1.A monopolistically competitive firm is operating in the short run at the optimal level of
output and is earning negative economic profits. Which equation must be true?
ATC > P > MR = MC
ATC = P > MR = MC
ATC > P = MR = MC
Microeconomics Final Eco211 notes
Section 9 Market Structure and Perfect Competition
Market structures, a system economists use to classify markets and industries
according to two main dimensions. Perfect competition is actually one particul
Eco 211 Microeconomics Notes
What you will learn:
Why oligopolists have an incentive to act in ways that reduce their combined profit
Why oligopolies can benefit from collusion
Perfect competition are over 100 producers
Oligopoly Market structu
SECTION l3/ADDITlONAL QUESTIONS
Use the following to answer questions 1'12:
Table: Value of the Marginal
Product of Labor and Demand
of Labor Total Product
1. (Table: Value of the Marginal Pro