Economics 2150A/B Lecture Notes - Marginal Utility, Economic Surplus, Average Variable Cost

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ECON 2150A/B Full Course Notes
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ECON 2150A/B Full Course Notes
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2: economically efficient (the level of output that maximizes total surplus) Is it a sr or lr scenario: q occurs where p = mc (ch. Note: you won"t be asked any math questions on ch. 9 this term (we covered this last term) A perfectly competitive market is characterized by: many buyers and sellers (everyone is a price taker) Identical products (one firm"s product didn"t differentiate from another firm"s product in any significant way: perfect information about price and quality, ease of entry and exit (equal access to resources) Example of firm"s graph vs. market"s graph: figure 1. It doesn"t determine the market price, it just observes that market price: the market demand curve is a normal downward sloping demand curve where market supply and market demand intersect. The perfectly competitive firm takes that market price as given and maximizes its profit by producing a quantity where the market price is equal to the marginal cost of producing.

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