ECON 4130 Study Guide - Final Guide: Marginal Revenue, Revenue Sharing, Henry Maccracken
5 Oct 2018
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Listing is intentionally less specific than previous review list for this material. Large firms are able to front high fixed costs and average total costs as well as low variable costs. Small firms are unable to front high average total costs and often are unable to break-even (see graph 1) One company can produce at lower costs than multiple small companies. It would lower efficiency and would increase total costs. Uncertainty of outcomes hypothesis- fans like uncertainty in sport (low attendance for teams that are too good or too bad) 1st degree- charging the consumer the max price they are willing to pay. 2nd degree- charging customers different prices based on the quantity of the good they consume (ex. bulk pricing) 3rd degree- firm charges different prices for the same good in different segments of the market (ex. senior discount) (see graph 2) Variable- based on opponent (set before the season starts)
