ECON 20A Final: Final Study Guide
20 May 2014
School
Department
Course
Professor
Document Summary
Consumer surplus measures the benefit buyers receive from participating. Diseconomies of scale can arise because of coordination problems that are inherent in any large organization: constant returns to scale- the property whereby long-run average total cost stays the same as the quantity of output changes. For all firms, average revenue equals the price of the good: marginal revenue - the change in total revenue from an additional unit sold. The firm shuts down if the revenue that it would earn from producing is less than its variable costs of production: exit - long run decision to leave the market. If price is above average total cost, profit is positive, which encourages new firms to enter. Monopoly resources: a key resource required for production is owned by a single firm. Government regulation: the government gives a single firm the exclusive right to produce some good or service. By trying to make monopolized industries more competitive.
