Econ 167 Final
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13 Terms
In a monopolistically competitive industry
long-run profit will be equal to zero
The two conditions characterizing the equilibirum in a monopolistically competitive industry are
MR = MC, P = AC
The two key features of the Krugman model are…
Increasing returns to scale and love of variety in consumption
Dumping is an example of
price discrimination
The profit maximizing condition for a firm selling in two markets (Home and Foreign) is
MRh = MRf = MC
The reason why a firm may sell at a lower price in the Foreign market compared to the Home market is because
the elasticity of demand is higher in the Foreign market than in the Home market
The existence of external economies of scale
is generally associated with a perfectly competitive industry
External economies of scale often arise because similar firms
locate in the same geographic region
In the presence of external economies of scale, trade
may or may not improve welfare in both countries
A learning curve relates ___ to ___ and is a case of ____ returns.
average cost; cumulative production; dynamic increasing returns
Which of the following is true about migration?
Workers move from low wage countries to high wage countries
Which of the following is true about migration based on the simple model of migration that we studied?
it increases wage in the source country, it reduces wage in the host country, it increases output in the host country, it reduces output in the source country (all of the above)
Which is true about migration based on the simple model of migration that we studied?
Native workers in the host country lose, owners of capital in the host country gain, output in the host country increases, world output increases (all of the above)