[ECO 211] - Final Exam Guide - Ultimate 65 pages long Study Guide!
29 Nov 2016
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ECO 211 Full Course Notes
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Goal of firm: maximize profit q: quantity of firm. Divide function into 2 parts: what has q & what doesn"t (i. e. constant & variable cost) q (output) When no output, you lose the fixed cost. Find maximum profit at q where goes from increasing to decreasing. 1 2 3 4 5 6 7 q. Mc goes through ac at min if it goes through ac. For firm to optimize output/maximize profit/sets output, set (marginal revenue: ) Questions over whether there really exists perfect competition anywhere. Prices different sometimes even within same thing (ex: gas price differs by location such as near airport) Assumptions underlying the competitive model (perfect competition) (competition=perfect competition) Buyers small relative to total market, so are sellers. Free entry & exit zero profit in long run. Easy for firms to get into market, easy to get out. They do(cid:374)"t i(cid:374)flue(cid:374)ce price (cid:894)there are so (cid:373)a(cid:374)y of the(cid:373)(cid:895), ca(cid:374) sell as (cid:373)uch as they (cid:449)a(cid:374)t at (cid:373)arket price.
