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Final Exam Monday, 12/15, 8-10 a.m. 80 multiple choice bring pencil, Oswego ID cumulative study guide is posted if taking MAT 102, 120, 210, 220  makeup.

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Presentation on theme: "Final Exam Monday, 12/15, 8-10 a.m. 80 multiple choice bring pencil, Oswego ID cumulative study guide is posted if taking MAT 102, 120, 210, 220  makeup."— Presentation transcript:

1 Final Exam Monday, 12/15, 8-10 a.m. 80 multiple choice bring pencil, Oswego ID cumulative study guide is posted if taking MAT 102, 120, 210, 220  makeup is Tues., 12/16, 2- 4  makeup ONLY if you have a conflict with MAT Monday, 12/15, 8-10 a.m. 80 multiple choice bring pencil, Oswego ID cumulative study guide is posted if taking MAT 102, 120, 210, 220  makeup is Tues., 12/16, 2- 4  makeup ONLY if you have a conflict with MAT

2 Final exam review some stuff NOT on the exam supply and demand elasticity production & costs market structures labor demand some stuff NOT on the exam supply and demand elasticity production & costs market structures labor demand

3 this review selected topics NOT exhaustive!  see the study guide selected topics NOT exhaustive!  see the study guide

4 requested for today, but NOT on the exam: game theory (10) indifference curves (6) CALCULATING elasticity (5) income & substitution effects (12) accounting vs. economic profit (7) graphs of perfect competition (8) price discrimination (9) game theory (10) indifference curves (6) CALCULATING elasticity (5) income & substitution effects (12) accounting vs. economic profit (7) graphs of perfect competition (8) price discrimination (9)

5 Supply and Demand how events shift demand or supply? how shifts in demand and/or supply will change P & Q? DRAW THE PICTURE! how events shift demand or supply? how shifts in demand and/or supply will change P & Q? DRAW THE PICTURE!

6 market for oranges orange juice discovered to prevent cancer what shifts?  demand (change in tastes) what direction?  increase orange juice discovered to prevent cancer what shifts?  demand (change in tastes) what direction?  increase

7 P Q S D D’ P rises Q rises

8 both demand and supply increase what happens to price and quantity? both demand and supply increase what happens to price and quantity?

9 P Q S D D’ P rises Q rises increase in demand

10 P Q S D S’ P falls Q rises increase in supply

11 so if both S and D increase  Q rises  change in P is uncertain so if both S and D increase  Q rises  change in P is uncertain

12 ElasticityElasticity questions about INTERPRETING elasticity elastic  Q very responsive to price changes inelastic  Q not responsive to price changes questions about INTERPRETING elasticity elastic  Q very responsive to price changes inelastic  Q not responsive to price changes

13 exampleexample elasticity of supply = 2  supply is ELASTIC  supply curve is relatively steep  a 1% increase in P cause a 2% increase in Qs elasticity of supply = 2  supply is ELASTIC  supply curve is relatively steep  a 1% increase in P cause a 2% increase in Qs

14 elasticity of demand and TR  inelastic TR will rise when P rises  elastic TR will fall when P rises what makes the demand for something elastic? elasticity of demand and TR  inelastic TR will rise when P rises  elastic TR will fall when P rises what makes the demand for something elastic?

15 cross elasticity  change in Qd when P of RELATED good changes  < 0 for compliments  > 0 for substitutes income elasticity  change in Qd when income changes?  > 0 for normal goods  < 0 for inferior goods cross elasticity  change in Qd when P of RELATED good changes  < 0 for compliments  > 0 for substitutes income elasticity  change in Qd when income changes?  > 0 for normal goods  < 0 for inferior goods

16 Production & costs total costs  total fixed costs incur even if output = 0  total variable costs = 0, if output = 0 total costs  total fixed costs incur even if output = 0  total variable costs = 0, if output = 0

17 given total product  calculate marginal product  calculate average product given total cost  calculate marginal cost given total product  calculate marginal product  calculate average product given total cost  calculate marginal cost

18 economic profit  if = 0, normal profit  profit above opportunity cost  > 0, if P > ATC  < 0, if P < ATC economic profit  if = 0, normal profit  profit above opportunity cost  > 0, if P > ATC  < 0, if P < ATC

19 Market structures perfect competition monopolistic competition oligopoly monopoly perfect competition monopolistic competition oligopoly monopoly

20 productproduct identical  perfect comp. differentiated  mon. comp.  oligopoly unique  monopoly identical  perfect comp. differentiated  mon. comp.  oligopoly unique  monopoly

21 entry/exitentry/exit free entry exit  perfect comp.  mon. comp. barriers to entry  monopoly  oligopoly free entry exit  perfect comp.  mon. comp. barriers to entry  monopoly  oligopoly

22 economic profit zero, in the LR  perfect comp.  mon. comp. may be > 0 in the LR  monopoly  oligopoly zero, in the LR  perfect comp.  mon. comp. may be > 0 in the LR  monopoly  oligopoly

23 demand curve perfectly elastic (horizontal)  perfect comp. downward sloping  all others perfectly elastic (horizontal)  perfect comp. downward sloping  all others

24 MR and P P = MR  perfect comp. P > MR  all others P = MR  perfect comp. P > MR  all others

25 collusion/interdependencecollusion/interdependence ONLY in oligopoly

26 choosing Q MR = MC except oligopoly, which is uncertain MR = MC except oligopoly, which is uncertain

27 choosing P perfect comp  price determined by market supply and demand monopoly & mon. comp.  use firm demand curve oligopoly  uncertain perfect comp  price determined by market supply and demand monopoly & mon. comp.  use firm demand curve oligopoly  uncertain

28 monopoly vs. perfect competition monopoly has  higher price  lower output  less efficient (loss of output) monopoly has  higher price  lower output  less efficient (loss of output)

29 cartelcartel oligopoly firms collude to act like a monopoly  split up monopoly output  charge monopoly price  split monopoly profits oligopoly firms collude to act like a monopoly  split up monopoly output  charge monopoly price  split monopoly profits

30 labor demand what is MRP?  what happens to MRP as Q of labor rises? given # workers, total output  calculate MRP  # workers hired, given wage what is MRP?  what happens to MRP as Q of labor rises? given # workers, total output  calculate MRP  # workers hired, given wage

31 example: smoothies price of smoothie = $2 smoothies per hour price of smoothie = $2 smoothies per hour Q laborTP MPMRP= MP x P wage = $6 hire 4 workers wage = $10 hire 2 workers


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