<p>Because Microeconomics deserves its own thread, here it is!</p>
<p>The exam is this Thursday, at noon. How are y'all gonna prep for it? I'm pretty much going to review with Princeton, and maybe borrow my friend's Barrons. Doing all of this today, and taking some practice tests tomorrow.</p>
<p>Some stuff that I've wondered in Microecon:
As long as marginal benefit equals marginal cost, shouldn't one keep producing? The marginal cost includes part of normal profit, right, so it would be beneficial to do so. One wouldn't have to worry whether or not he or she was producing above AVC or anything, but according to the book, one does.</p>
<p>And to calculate the elasticity of an elastic/inelastic graph, it's run over the rise?</p>
<p>How does one read a Game Theory table?-- I can't tell whether the left number in each box belongs to the guy on the left or the guy on top.</p>
<p>Sorry for all the questions. I might be posting more later, but this is all I could think of at the top of my head. I'll be sure to answer other people's questions too!</p>
<p>Let’s say that before, a country could only produce 200 teddy bears(with all its resources) or 300 candy bars(with all its resources). The opportunity cost for at a teddy bear then would be 2bears/3candybars. For this example, let’s also assume that the production possibilities curve is linear, so it doesn’t really matter which quantities of each item you produce at.</p>
<p>Trading with another country that is more efficient at producing teddy bears(comparative advantage) that its opportunity cost is only 1bear/3candybars will help the original country increase its amount of teddy bears and/or candy bars to extend the curve(productions possibility frontier) farther.</p>
<p>Btw, price is the independent variable in demand/supply graphs, right? It’s just weird because it’s on the vertical axis.</p>
<p>I didn’t buy a test prep book because I think the class prepared me really well. But do we need to know about utility maximization, or the different kinds of labor unions? I remember doing problems about maximizing utility per dollar in the class, but I’ve never encountered an MC or FRQ about it.</p>
<p>Simple, the response you are talking about is as a result of demand which is not considered in that question, only the effects of price increase, and only on supply. The shift of demand is an after-effect.</p>
<p>Some more unanswered questions I have, haha. Hopefully someone can answer them soon:</p>
<p>When graphing the marginal revenue and demand curves of a pure monopoly, I understand why the marginal revenue curve is below the demand curve, but how come the marginal revenue curve has a slope twice as steep as that of the D?</p>
<p>To calculate the profit for the pure monopoly, why would one subtract averagecost<em>quantity from price</em>quantity?</p>
<p>What’s the difference between dominant strategy equilibrium and Nash equilibrium such that not all Nash equilibriums are dominant strategy equilibriums?</p>
<p>For the fair return price, why would one set price at the ATC? I know this allows for making normal profits and no economic profit, but the marginal cost curve is below at this point so wouldn’t one be making quite a bit of money?</p>
<p>Lastly, what are the determinants of elasticity of supply?</p>
<p>Buy a prep book and get a copy of Microeconomics by N. Gregory Mankiw at your local library. I wouldn’t buy it though, as you don’t really need it. A prep book alone is enough to get a 5.</p>
<p>I didn’t bother getting a review book or paying too much attention during class because I figured that I would only have to worry about Macro/Micro for one day during the entire year.</p>
<p>to read a game theory table, the number(profit) on the left belongs to the firm on the left of the table, and the number(profit) on the right belongs to the firm on top of the table</p>
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<p>dominant strategy equilibrium is when both person A always goes high(or low) and person B also always goes high(or low). each of them have a dominant strategy because of this, and the intersection between them produces a Nash equilibrium.</p>
<p>thats all I know so far as I do this review. i counted 7 questions on the thread left unanswered, all of which I would love to know the answer too!</p>
<p>The product could be a giffen good. A product with an upward sloping demand schedule.</p>
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<ol>
<li><p>The MR Curve is below the demand curve. It does not have to be twice as steep.(at least I believe).</p></li>
<li><p>Yes, You find the vertical distance between D and where the ATC would be at quantity Qm. Then you multiply that distance by the quantity.</p></li>
<li><p>Nash EQ is when there is no longer an incentive to decrease the price in a noncollusive oligopoly. Its when both firms in a duopoly (for example) have reached a dead lock. Dominant strategy is when no matter what the other firm does, it will do better off then if it did the other strategy. There could be a situation where both firms lowered the price, and made each other worse off than if they would have not changed the price at all. (sorry its a pretty bad explanation) I would draw the pic for you if I have time later.</p></li>
</ol>
<p>4.I’m assuming you are talking about a perfectly competitive industry and normal profit. The price is set at ATC because the price is determined by the market equilibrium. D=MR=min ATC=MC and D is perfectly elastic. Changing the price would cause consumers to go to other firms because there are many many suppliers if the cost was higher, and if it was lower, the cost of producing the good would be greater than the price, making the firm have losses. Remember, for profit maximizing quantity and price, you need to set MC=MR. In this case, MR=D=min ATC, so thats why we set the price at min ATC.</p>
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<li>I’m not sure what you’re asking. What shifts it? or What causes the elasticity?</li>
</ol>
<p>for number 2 genre, i think hes talking about the average cost curve, and not the average total cost.</p>
<p>in number 4, isnt the fair return price involved with regulating monopolies tho? so its not the same conditions as a perfectly competitive market.</p>
<p>hes talkin about the determinants of supply elasticity, so i suppose its what increases/decreases a product’s elasticity(for supply).</p>
