01:220:102 Study Guide - Midterm Guide: Diminishing Returns, Normal Good, Variable Cost

• School: Rutgers University
• Department: Economic
• Course: 01:220:102
• Professor: All

Document Summary

Derived from many srac: shutdown point, market share, long run average cost, long run, amount of additional utility received given the price of the product. Free entry and exit in the market - implies perfectly elastic demand (hypothetical extreme --> closest e. g. agricultural market) > outputs > inputs: mixed strategy, firm (business, trigger strategy, tying sales, barriers to entry are something other than legal prohibition, caused by economics of scale. Firm must produce at least normal profit for the owner to stay in business. Supply inelastic (e. g. skilled workers: diminishing marginal returns, constant cost industry, increasing cost industry, decreasing cost industry, follows the same rules as budget constraint graph, except with different variables. People seek utility maximizing point, which depends on personal preference: long run equilibrium, monopolistic competition, differentiated product, labor-leisure constraint graph, requires dealers to sell for at least a certain minimum price.