fina

Question 1

P = ATC

Answer 1

0 economic profit

Question 2

P = MC

Answer 2

efficiency condition - DWL and TSS (societal wellbeing)

Question 3

P = MR

Answer 3

price taker condition (perfect comp vs monopoly)

Question 4

ATC = MC

Answer 4

minimum efficient scale - producing at lowest average ATC (individual firm)

Question 5

what condition only holds only the LR for competitive markets

Answer 5

p = ATC

Question 6

which condition holds all the time for every industry

Answer 6

MR = MC

Question 7

firms will hire labor up until the ____ equals the ____

Answer 7

value of the MPL, wage

Question 8

mc, wage, mpl

Answer 8

mc = w / mpl

Question 9

MR = MC

Answer 9

profit-maximizing condition

Question 10

elasticity of downward sloping demand curve, price high to low

Answer 10

elastic, unit elastic, inelastic

Question 11

MRS is given by

Answer 11

slope of the indifference curve

Question 12

substitution effect

Answer 12

transfer out of a good that is relatively expensive

Question 13

income effect

Answer 13

tracks how you respond to changes in real income hoolding relative prices constant.

Question 14

MRS formula

Answer 14

MUx / MUy

Question 15

leisure - normal or inferior good?

Answer 15

normal

Question 16

giffen good

Answer 16

consumption increases with price
- inferior good where income outweighs substiution

Question 17

revenue maximizing conditions

Answer 17

producing up to MR = 0, so MR = MC bc profit max

Question 18

children / elderly poverty

Answer 18

children are more likely, elderly less likely to poor

Question 19

income inequality US and global

Answer 19

decreased globally increased in US

Question 20

elasticity equation

Answer 20

(P2 - P1) / [(P1 + P2) / 2]

Question 21

MSB is associated with

Answer 21

demand curve

Question 22

MSC is associated with

Answer 22

supply curve

Question 23

positive vs normative

Answer 23

positive is quantifiable
normative = should statement

Question 24

price is ALWAYS equal

Answer 24

average revenue

Question 25

the greater the inelasticity the ____ the subsidy benefit

Answer 25

greater

Question 26

Price of substitute increase - effect on demand

Answer 26

increases

Question 27

price of substitute increases - effect on supply

Answer 27

decreases

Question 28

price of complement increases - effect on demand

Answer 28

decreases

Question 29

price of complement increases - effect on supply

Answer 29

increases

Question 30

marginal tax rate

Answer 30

change in taxes / change in income

Question 31

average tax rate

Answer 31

total taxes / total income

Question 32

elasticity equation

Answer 32

change in quantity over change in price

Question 33

slope of PPF

Answer 33

opportunity cost

Question 34

at optimal

Answer 34

MRS = Px / Py

Question 35

how to find DWL

Answer 35

find social lines between Q mkt and Q eff - complete the triangle

Question 36

cross price elasticity of demand

Answer 36

% change in Q demanded of Good A / % change in Q demanded of Good B

Question 37

income elasticity of demand

Answer 37

% change in Quantity demanded / % Change in income

Question 38

At optimum ___ and ___ have to be equal

Answer 38

MRS, ratio of prices

Question 39

bowed in indifference curve signifies what for SE

Answer 39

behaves normally