ECON 201- Final Exam Guide - Comprehensive Notes for the exam ( 121 pages long!)
Document Summary
Chapter 18: the market for the factors of production. Perfectly competitive market: firms are price-takers, many identical buyers and sellers, buying and selling same product, no barrier to entry. Key resources (e. g. company having control of most diamond mines) Trade secrets (e. g. secret formulas: high fixed costs (e. g. electricity) Lower cost for one firm to produce 1000 units than 2 firms each producing 500 units. Q: monopolist demand, co(cid:373)petitive fir(cid:373)"s de(cid:373)a(cid:374)d curve. Sell any quantity at market price: mo(cid:374)opolist"s de(cid:373)a(cid:374)d curve. To sell more quantity, must lower price (law of demand: monopolists demand. 1. 00: ar = (p*q)/q = tr/q, mr = tr/ q, mr can be < 0, ar = p; same as competitive firm, mr < p; different from competitive firm. Sell 1 more: tr = 4xp* + p* Sell 1 more: tr = 4(p* - 1) + (p* - 1) 4(p*-1) + (p*-1) = (p*-1) (p* - 5)
