Final
You sell your good in a perfectly competitive market where the market price is $7.00. When yousell 100 units your total revenue is $700. When you sell 101 units:
total revenue increases by exactly $7.
Signaling Model
validity of info for accurately understanding something isnt easily observed
All of the following statements about asymmetric information are true except: 27) A) Asymmetric information creates market failures because it makes it harder for individuals to engage in transactions that would take place in the presence of perfect information. B) Asymmetric information occurs in the market for used cars and in the insurance market. C) Asymmetric information can only be solved through government intervention. D) Asymmetric information occurs when one party to a transaction has relevant information to the transaction that the other party does not have.
C. Asymmetric information can only be solved through government intervention.
A dominal strategy
Results in a higher pay off chosen by the other player
marginal Cost
The change in total variable cost which accompanies one extra unit of output
Price equals marginal revenue for a competitive firm because
The price doesn't change when the firm changes output
Average Cost = _____________
Total cost divided by output
economic profit is
a firm's total revenue minus its explicit and implicit costs and lower than accounting profit
human capital model
assumes that men and women bring different natural skills to the workplace
Signaling takes place in markets with ________.
asymmetric information
If market price exceeds _________ cost, Profit will be _________
average, positive
People with more education earn higher wages...
both
Economic cost and accounting cost differ because economist include
both explicit and implict cost
In a simultaneous move game...
each player has to make his choice without knowing his rival's choice
In the long run, each firm in an industry will:
earn only enough to cover the opportunity cost
Average fixed cost will...
fall as output rises
if marginal revenue is greater than marginal cost
firm should increase output
Decide whether it is applying to the signaling model, the human capital model, or both... Policies that increase the amount of schooling will increase productivity...
human capital model
A basic distinction between the long run and the short run is that
in the short run, complete adjustment of all inputs is impossible, while in the long run allinputs can be adjusted.
Suppose a perfectly competitive firm faces the following short-run cost and revenue conditions: 7) ATC = $12; AVC = $10; MC = $15; MR = $16. The firm should
increase output
Game theory is a useful tool to study strategic interactions as they were characterized by:
interdependence
In College Station, there are many coffee shops, each offering nearly identical coffee but each shop 19) is located in a different place around the city. It is likely a coffee shop in College Station operates in A) oligopoly market. B) monopolistically competitive market. C) perfectly competitive market. D) monopoly market.
monopolistically competitive market.
A monopoly creates a deadweight loss because the monopoly
produces less than the efficient quantity.
Offering a warranty is an example of:
signaling
When a student graduates from college, they are no more productive than they started...
signaling
If marginal revenue is less than marginal cost
the firm should decrease output
One requirement for an industry to be perfectly competitive is that A) many firms produce similar, but not identical products. B)sellers and buyers have imperfect information about prices. C) established firms have no advantage over new firms. D) different firms produce widely different products. E)established firms have a significant advantage over new firms.
C
Which of the following is an example of price discrimination? A) Increasing the price of a product when demand for the product increases. B) Reducing the price of a product to reduce excess inventory. C) Bundling complementary products to attract additional sales. D) Charging different prices for a product in different regions of the country due to differences in transportation costs.
C) Bundling complementary products to attract additional sales.
When marginal cost is rising, the average total cost ________
could be rising or falling
The perfectly competitive, profit-maximizing rate of production
occurs at the point at which marginal revenue is equal to marginal cost.
Economic cost and accounting cost differ because accountants include
only explicit cost