<p>^
isnt #2 same thing?</p>
<h1>4. sorry I read it wrong.but my explanation for the wrong question should be right haha. I just looked at 0 economic profits so I jumped on the horse and assumed it was perf. comp. Anyways, for the answer, If D and ATC intersect, and they produce at that point, isnt the economic profit 0? MC is just pulling the ATC down.</h1>
<h1>5. Time. The longer the supplier has to make a decision, the bigger the reaction.</h1>
<p>for 2, im not sure, but i suppose so.</p>
<h1>5 - time, whether a good is a necessity or a luxury, and number of close substitutes</h1>
<p>And sorry. #1, I guess it is.</p>
<p>Lets say P is 55, and Q is 0. That explains the D curve
TR is 0 so MR is 0.</p>
<p>If P is 50, Q is 1, TR is 50, MR is 50
If P is 45, Q is 2, TR is 90, and MR is 40.</p>
<p>P goes down by 5, MR is down by 10. So thats double. I’m not sure if it applies in all situations.</p>
<p>
</p>
<p>some questions left unanswered. can some1 explain the (2x)steep slope of MR compared to D…i remember reading about it somewhere.</p>
<p>edit- nvm, thx genre for explaining the 2x slope one. do u need the tests?</p>
<p>are there any other determinants of supply elasticity?</p>
<p>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>you produce until MC = MR if you’re maximizing profit
But, if you’re below AVC, you’re making less than you’re paying per month so you’re suffering a loss, hence long run shutdown</p>
<p>And to calculate the elasticity of an elastic/inelastic graph, it’s run over the rise?</p>
<p>Yea, percent change in each</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>Uhh, its confusing but left profits are for left guy -> Usually guy mentioned first in the question basically</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>The MR curve slopes twice as steep because to sell more units of output, the monopoly must lower the price of all units sold before it. Basically, this makes a wedge between demand and MR because demand just changes with price. MR changes more because you don’t just change the last object, but all of them before it.</p>
<p>To calculate the profit for the pure monopoly, why would one subtract averagecost<em>quantity from price</em>quantity?</p>
<p>Average Cost * Quantity gives you total cost. P*Q gives you Rev. Profit = Rev - Cost</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>Im guessing Nash equilibrium makes two people not want to change their price. Like if it was at 35, and neither would profit from making it 40, they wouldnt. In dominant strategy equilibrium, both could profit so both would want to. </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>If price is set at atc, P<em>Q = P</em>ATC
P=MC is allocative efficiency pricing, P = ATC
Usually ATC is below MC, thats where you maximize production</p>
<p>Lastly, what are the determinants of elasticity of supply? </p>
<p>Idrk this, you usually look at elasticity of demand which is based on like income or cross price
complements, normal, inferior, substitute goods
supply elasticity just changes as producers find new ways to change production as price changes</p>
<p>I’m having trouble with this question for the Micro test. This is one of the multiple choice questions from the actual .pdf on AP Central:</p>
<p>If firms in a perfectly competitive industry have been dumping toxic waste free
of charge into a river, government action to ensure a more efficient
use of
resources would have which of the following effects on the industry’s output
and product price?</p>
<p>Output --------- Price</p>
<p>(a) Decrease Decrease
(b) Decrease Increase
(c) Increase Decrease
(d) Increase Increase
(e) Increase No change</p>
<p>It says the correct answer is b, but I keep getting c. Can anyone explain to me why the correct answer is b?</p>
<p>Well the government would want the company to decrease the output(so less waste) and increase the price so that less ppl buy the good therefore the company wont have as much toxic waste</p>
<p>However, if the government is offering “a more efficient use of resources” wouldn’t it cause the supply curve to shift to the right, providing an increase in supply and a decrease in price, given that demand remains the same? By the question, it seems that they are just lowering the cost for the firms involved.</p>
<p>That’s saying that greater efficiency means a greater supply, but that’s not true. The government would promote better usage of resources by trying to minimize waste(and thus increase efficiency), and it could do this by taxing the firm. The firm in response would produce less and increase the price of its products.</p>
<p>Hmm, yeah, I can see that, Sagert. That’s a tricky question, since you can view it either way, really…</p>
<p>Alright, well, anyone know why the short run average cost curve intersects the long run average cost curve at its cost-minimizing amount?</p>
<p>bump. sorry guys, but i need the above question answered!</p>
<p>what score will I need to get a 5? Predictions?</p>
<p>According to the AP Pass Microeconomics score calculator, 73/90 is a 5. Yeah, no way I got above a 3 on this one…</p>
<p>how is 73/90 a 5? isn’t it normally that if you get all the multiple choice right, you automatically get a 5, in this case, a 60/90?</p>
<p>yeah i find the curve for microeconomics presposterous</p>
<p>“anw, for micro, question 2, is MP curve gonna change ?”</p>
<p>I put that MP stays the same, but MRP decreases. I’m curious if this is correct as well.</p>
<p>For Micro #3, is the quantity Q2 or Q1? And what was the comsumer surplus and deadweight loss after taxes?</p>
<p>Andrew L: I said the same thing for micro question 2. and if I remember correctly I said that the quantity on number 3 was Q1 (I don’t remember the points for the other areas but consumer surplus was the small triangle in the upper left and deadweight loss was the area if you dropped a vertical line at Q1 - the intersection between that line and MSC was one point, the intersection with MSB was another, and the old equilibrium point was the last I believe…)</p>
<p>I always thought dead-weight loss was bad though. But if the government corrects the externality, it goes to the optimal quantity. Would that mean there is no dead-weight loss since its optimal?</p>