Comparative Statics of Supply
The 5 shifters of supply curve that were discussed in class
What are
Size of industry- entry/exit
Tech change
Price of inputs
availability of resources
price of related outputs?
Marginal Revenue formula
What is P*(1-1/Ed)?
Costs in terms of economic profit
types of products of perfectly competitive firms
what are homogenous/undifferentiated products?
has a unique product with a market that has significant barriers of entry or exit
what is a monopoly?
Supply curve shifts to the left
What is a decrease in supply?
Sign of (1-1/Ed) is positive
What is Ed>1?
Rent, wages, interest, normal profit
What is the opportunity cost for the four factors of production?
equal to the price determined by equilibrium in the market
what is the demand curve that PC firms face
MR = MC
what is the level of output where monopolies profit maximize?
The price of butter used to make nestle cookies decreased
What is an increase of supply?
Ed=1 graphically
What is at the q midpoint on the downward sloping linear demand curve?
https://docs.google.com/drawings/d/12oLf1EDA2McayfZ45Ho382SHkihdtaLm0Ondo3lUJhM/edit?usp=sharing
MES characterizes capacity of a firm (graphically)
What does minimum AC characterize?
https://docs.google.com/drawings/d/1AAJF_XFl8reIaWFhq5oEJiew35uPvMOSz_F3jzuqolY/edit?usp=sharing
P => min AVC
What is PC supply in the short run is the MC curve?
Area above price and below demand
Increase in supply (graphically)
What is shift right of the supply curve?
Q midpoint on Total Revenue curve
What is profit maximizing point of Total Revenue Curve?
https://docs.google.com/drawings/d/1V6oAZqbsnEjYe4qYltIauSN9xC_IY3RNZgHxGTxzudU/edit?usp=sharing
Graphical relationship between AC, AVC, and MC
the demand curve is in between the average cost and average variable cost curve
What is a PC firm making a loss but still produces in the short run?
the welfare not received by anybody
What is the deadweight loss?
A hurricane destroys the petrol and gasoline resources in Houston
What is a decrease in supply?
formula for the three different types of elasticity
what is
percent change of delta Q / percent change of delta Income
percent change of delta Qx / percent change of delta Py
percent change of delta Q / percent change of delta P ?
Average Cost is decreasing (graphically)
What is increasing returns to scale
https://docs.google.com/drawings/d/1kvoYysOh-F866ZMbQmoZ-X2hq9MJ6bg-VMWsZ5LF9P4/edit?usp=sharing
If a PC firm has a MC=$8, what should it set its price at in order to be profit maximizing
What is PC Firms cannot set price (PRICE TAKERS)?
the two observations of PC firms, two observations of Monopolies, and and their consumer and producer surpluses when discussing total societal welfare? (graph)
What is
PC firms produce more
PC firms charge less
M firms produce less
M firms charge more
CS of m = A
PS of m = B+D
CS of pc = A+B+C
PS of pc = D+E