ECON 111 Study Guide - Final Guide: Arbitrage, Market Power, Trade Creation

• School: Queen's University
• Department: Economics
• Course: ECON 111
• Professor: Ugurhan Gazi Berkok

Document Summary

Often these will be related directly to assignment problems. The marginal cost curve we came across last week is going to be very important over the next few lectures. A solid understanding of this concept is important. Recall that the marginal cost is the slope of the total cost curve. In the figure below, we see the marginal cost being derived from the total cost curve. The average cost at a point is the slope of the straight line going through the origin on the total cost curve. The marginal cost curve will cut both the average variable cost and the average total cost curves at their minima. A competitive market exists if: homogeneous product reaches markets everywhere, consumers are well-informed on products and prices, firms are small relative to the market, free entry into and exit from the industry. They all sell coke, pepsi, lottery tickets, candy (homogeneity).