<ol>
<li>Why would the competitive market's supply curve be the monopoly's MC curve? Would it be under the condition of constant returns to scale only?</li>
<li>Why doesn't a monopoly have a supply curve?</li>
</ol>
<ol>
<li>Why does a monopoly’s demand curve is the same as its average revenue curve?</li>
<li>Does TC include opportunity cost (I am talking about breaking even here)?</li>
</ol>
<ol>
<li>For a competitive market, the cost of producing one additional good is equal to the price. Therefore P = MC and the firm’s supply curve is P. therefore P = MC and supply curve of firm in a competitive market = MC</li>
<li>Total costs include opp. costs</li>
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<ol>
<li>PR says that if the wage is exactly the same as MRP of labour, then the company is indifferent toward hiring the worker.
But shouldn’t the maximum wage that the company pays equal to MRP of labour minus the cost of the additional raw materials used to produce the additional products?</li>
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<p>benhpark, for #4, are you saying that when a firm breaks even, it is actually earning accounting profits?</p>
<ol>
<li>Uh well TPR is saying it in a roundabout way for MRPL = w condition
w= MRPL occurs when the profit is maximised and no i have not heard about any further costs of raw materials involved in this condition.
w<mrpl --=“”> workers should be hired until
w=MRPL –> enough workers are hired so that profit is maximised and
w>MRPL –> TP<0 and for the sake of maxing out profit workers hiring should be stopped
If MP<0, then the firm should NEVER EVER HIRE ADDED WORKERS this comes out in one of the CB FRQs from 1999 - 2009</mrpl></li>
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<p>ahh yes! I forgot and my memory came back, monopoly does not have any supply curve shown because the FIRM ITSELF CONTROLS THE OUTPUT AND IT IS A PRICE SETTER/MAKER.</p>
<p>THIS IS EXACTLY WHY EVERYONE who is studying econ should have bought 5 steps…</p>
<p>PR was decent for those who took the class back in like '06-08, when 5 steps wasnt a Big Name</p>
<p>happysunshine: if you had bought 5 steps, you would not be asking any of these questions, because all the things i have talked about and all the questions i have answered primarily cam from the knowledge i just gained from 5 steps</p>
<p>uhhh… gruh ok, whatever. too late though. Not all that big deal when u hav eidetic memory + Mankiw’s.</p>
<p>Unfortunately it’s too late for me to by 5 steps… The local bookstore & library don’t have the book.<br>
So thatguyinclass, would you mind sharing the answers?</p>
<p>well, if you really have any more questions, just post them all at like 5 PM Eastern Time</p>
<p>im just starting macro and since my focus was really off yesterday, i will have to try to finish in time for me to do some FRQ and MC tests</p>
<p>I will just post questions if I encounter them. Thanks.</p>
<ol>
<li><p>Externalities
To find the socially optimal quantity for negative externality, one must find the intersection of MSC & MB.
To find the socially optimal quantity for positive externality, one must find the intersection of MSB & MPC.
Aren’t negative and positive externalities similar? Then why are the ways fo finding the socially optimal quantity different?</p></li>
<li><p>Why is using gasoline an example of negative externality?</p></li>
<li><p>Why is the marginal cost curve (above average variable cost) equivalent to the supply curve for a competitive firm? Is it just because MC=p=MR?</p></li>
</ol>
<ol>
<li>I read Mankiw’s book and it says,
for neg. ext., we have to find where MSC (MEC + MPC) and MPB intersect.
for pos. ext., we have to find where MSB (MEB + MPB) and MPC intersect.
PR does a friggin crappy job explaining this, as the graphs are wrongly labeled.</li>
<li>Use of a gasoline is a negative spillover. By using up gas you pollute the air and pose a cost to the environment. Also, some people get uncomfortable with smoke and pollution and stuff, so that is why gas is an example of negative ext.</li>
<li>yup</li>
</ol>
<ol>
<li>Which of the following could have caused an increase in the demand for ice cream cones?
a. A decrease in the price of ice cream cones
b. A decrease in the price of ice cream</li>
</ol>
<p>My reasoning: either both should be the right answers or neither since a decrease in price can only cause an increase in quantity demanded.
But the answer that PR gives is a. What’s wrong then?</p>
<ol>
<li>Which of the following would result in consumers paying for the largest burden of an excise tax placed on a producer?
a. demand elastic, supply inelastic
b. demand elastic, supply perfectly elastic
c. demand inelastic, supply price elastic
d. demand inelastic, supply inelastic
e. demand perfectly inelastic, supply elastic
How do you approach this type of question? Do you draw a graph for every single scenario? If the supply is perfectly elastic, will the horizontal line move up?</li>
</ol>
<ol>
<li>If a decrease in income of 10 percent would cause Alec’s consumption of vitamins to increase by 15 percents, would vitamins be categorized as an inferior good for Alec?
I think it would but that’s not PR’s answer…</li>
<li>In a long run, does a monopoly earn zero economic profit?
13.If TR=TC, the company breaks even. But since TC includes opportunity cost, does the company actually make accounting profit?</li>
</ol>
<ol>
<li>What do you think of PR’s practice test for micro? Easier, about the same or harder than the actual exam?</li>
</ol>
<p>Bump!
10 char</p>
<p>@happysunnyshine
9. The answer is A. A change in price is a change in QUANTITY DEMANDED not change in demand. It is just a movement along the curve, not an actual shift in the curve. A change in the price of ice cream would increase the demand for cones since they are substitute goods. This is an actual shift in the curve.</p>
<ol>
<li><p>I believe you just need to draw them out. If i got this, i would skip it since it requires a lot of time</p></li>
<li><p>What is PR’s answer?</p></li>
<li><p>No. A monopoly can earn economic profit. Only monopolistic and competitive cannot.</p></li>
<li><p>I dont think TC includes opportunity costs. Opportunity costs cannot actually be measured in a monetary value.</p></li>
</ol>
<ol>
<li><p>Answer is B, Change in price of ice cream cones will only change the quantity demanded of ice cream cones, but change in price of ice cream a complement, will change the demand of ice cream cones.</p></li>
<li><p>The more inelastic group will share the greater burden of the tax. So I guess C</p></li>
<li><p>It should be an inferior good… i was wondering the same</p></li>
<li><p>Yes I’m pretty sure total cost include opportunity cost.</p></li>
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<p>Oops. I got confused on #9. I said substitute when its really complement. B should be the correct answer, idk why the thing said A. Joifnok is correct.</p>