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Midterm

Managerial Econ - Midterm Notes.docx
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Department
Commerce
Course
COMM 295
Professor
ratna
Semester
Fall

Description
Perfect Competition Monopoly Monopolistic Competition Oligopoly - Many sellers, many - One seller, many buyers - Many sellers, many - Few firms, many buyers buyers buyers - No entry - Free entry - Free entry - Limited entry (when P > ATC in LR) Price - Price taker - Price setter - Price setter - Price setter - Price: low - Price: very high - Price: high - Price: high - P = MC - P > MC - P > MC - P > MC Product - Homogenous goods - Single product (unique) - Differentiated product - Similar product Profit - P = MR = MC - MR = MC (DWL) - MR = MC - MR = MC Maximization - MP = 0 - No economic profit Positive Profits (SR): Cartel & Collusion Positive Profits (SR): Positive Profits (SR): - To increase profit; Short Run raise price, limit production (kinked Demand curve) Positive Profits (SR/LR): Loss Negative Profits (SR): Negative Profits (SR): Negative Profits (SR): Negative Profits (SR) Equilibrium - SR/LR - Zero profit - SR/LR - Zero Profit - SR/LR – Zero Profit - SR/LR – Zero Profit Long Run Long Run Long Run Long Run - Profit = zero - Profit = positive or - Profit = positive or zero - Profit = zero zero - P = MC= ATCmin - P = ATC - P = ATC Consumer - - Price higher than surplus competitive prices, Cartel  DWL Producer Surplus Deadweight Loss Elasticity of - Perfectly elastic - Relatively inelastic - Highly elastic (LR) - Demand – inelastic  demand prices may be above - If the demand is elastic, then marginal revenue is competitive level positive. = PRODUCE - If the demand is inelastic, then marginal revenue is negative. - If demand is unit elastic, then marginal revenue is zero. - Linear D, MR = same intercept, twice the slope Price - - D = MC -
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