ECON101 Study Guide - Midterm Guide: Diminishing Returns, Perfect Competition, Demand Curve

• School: University of Alberta
• Department: Economics
• Course: ECON101
• Professor: Gordon Lee

Document Summary

35 multiple choice, **make sure you write exam code. Many short runs to make one giant long run (bc in short run, only fixed and add labor, but in long run now you can change fixed inputs now to add in labor land and capital) 1. perfect competition: monopoly, monopolistic competition, oligopoly (limited competition, small # of buyers and sellers) Objective: maximize profits, decides both quantity and price: r = pq, ar = r/q, mr = r/q, profit = r - c. Maximize profits for short run: rule 1) firm produces only if tr >/= tvc or p >/= avc, rule 2) firm maximizes profit when mr = mc (intersect on graph) more. Mr > mc = increases, firm should produce. Mr < mc = increases, firm should produce less. Agricultural market, foreign exchange, internet- ebay) (deadweight loss is equal to.