Second Micro Exam
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Course Number:
Principles of Microeconomics Second Exam: March 15th
Chapters: 11, 12, 13, 14, 15
Ideas on the Exam (a good list, but not an exhaustive list; you are responsible for all material from the text and lectures even if it's not listed here)
Game Theory
The Prisoners' Dilemma
Dominant strategies
Nash equilibrium
Supply Costs
The meaning and behavior of business costs:
a. Implicit and explicit costs
b. Fixed and variable costs
c. TC, ATC, FC, AFC, VC, AVC, MC
d. The link between the Law of Diminishing Returns and the behavior of VC and TC
e. The relationship between ATC, AVC, and MC
Economic profit, accounting profit, and normal Profit
Perfectly Competitive Industries
Characteristics of a perfectly competitive industry
Shape of the demand curve for a perfectly competitive firm and the industry
Behavior of the MR curve
The profit-maximizing choice of output (MR = MC)
The shut down decision for a perfectly competitive firm
Why perfectly competitive industries will tend toward normal profit in the LR
Monopolistic Industries
Characteristics of a monopoly
Natural and legal monopolies
Shape of the demand curve for a monopoly firm and the industry
Behavior of the MR curve
The profit-maximizing choice of output (MR = MC) and price
Price discrimination
Effects of monopolies on consumers
Anti-monopoly legislation
Problems you should be able to work
Use payoff matrices in a game theory example
Calculating costs and revenues, including TC, FC, VC, ATC, AFC, AVC, MC, MR, and TR
Calculating economic and accounting profits
Determining the profit-maximizing level of output for a firm
Determining the amount of profit or loss from a level of output
Determining whether a firm should operate or shut down
Determining the price a monopolist will set
