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ECO100Y1 Study Guide - Perfect Competition, Profit Maximization, List Of Bus Routes In Queens


Department
Economics
Course Code
ECO100Y1
Professor
James Pesando

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Q1)The market for photocopiers is perfectly comp. A technological
breakthrough lowers the cost of photocopiers. If the demand for photocopiers
is inelastic, sales will:
Answer:c, quantity (output) rises and total revenue falls diagram #1, March
30, 2011
Note: Demand Curves
1.Change in quantity demanded vs change in demand
2.Substitutes vs. Complements
3.Normal vs inferior goods ( as income goes down, you use less)
Q2) a perfect comp industry is in short run equilib. Industry price and output
will increase under which one of the following conditions:
Answer:d, March 30, 2011 Q#2
Incidence of a sales tax
(who ultimately pays tax, the buyer or the seller?)
Assume tax to be paid by seller
(remember: incidence does not depend on whether paid by seller or by buyer)
Q3) a tax has been levied on a product. The more price-elastic the demand for
that product is:
Insight: use perfectly inelastic and perfectly elastic demand curves to analyze
problem.
Answer: D, the lower is the revenue that is raised by the tax. March 30, 2011
Q#3
Observations
Perfectly inelastic DD: Market price increases by amount of tax full
incidence falls on buyer.
Perfectly elastic DD: Market price does not increase full incidence falls on
seller
COSTS
Marginal Cost
Average Variable Cost
Average Fized Cost
Average TOTAL Cost
Q4) a firms mc is $30, ATC $50, and output is 800 units. Its total cost of
producing 801 units is probably:answer: D March 30, 2011 Q#4
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