eco 100 midterm 2

exit price

p < min(atc)

shutdown price

p < min(avc)

for all four market structures profit maximizing q is found at the intersection of

mc = mr

what to do with fc when finding profit?

subtract from the profit after q is multiplied

how to find dwl for monopoly

½ * (Qcomp. - Qmonop.) x (Pmonop. - Pcomp.)

what does cost structure include

marginal, fixed, variable, etc.

how to calculate mr

2d

how to calculate profit

prof = (P-ATC) * Q OR Q(AR-ATC)

what is AR always equal to

AR = PRICE

where does mc cross at the minimum value

ATC AND AVC

how to calculate mr

MR = ΔTotal Revenue/ΔQuantity

how to calculate MC

MC = ΔTC / ΔQ

how to calculate ATC

TC/Q

what is the socially optimal quantity

d = mc

what does it mean to solve for p and q in a perfectly competitive market

0 ECON PROFIT

SET DEMAND EQUAL TO MC

what does it mean to solve for p and q in a cartel / colluding agreement?

find mr

split q into the q for each firm; i.e., Q=q1, q2… etc, and subsitute it for each equation

i.e., if solving for firm 1’s Q and P = 70-10q, MR = 70 - 20q, then P= 70 - 10q2 - 20q1

aggregate into Qeach, adding the MR version of q and regular q

solve