Hmm...more things to think about!

In my quest (at the moment, it seems impossible) to finish grades by Monday, I totally forgot to post some links and questions for you guys & gals! I know, I know...inexcusable. :) I don't have a better one. I *did* learn, though, that I should know better than to pile on big things (freshmen) at the end of a quarter. I haven't been this swamped at grading time in years.

I know that out of the goodness of your hearts, you'd be willing to let me NOT grade your term papers, but I won't let you sacrifices yourself (selves?) for that. :) :)

Okay - here we go:

Monopoly:
http://www.reffonomics.com/monopoly1.ppt Introduction to Monopoly. It starts with info on copyright, trademark, etc that is useful for possible questions on the test.

http://apecon.us/monopolyperfectcompetition.gif (Price searcher = price taker) This is on MR & D curves and compare PC, M & MC (which we haven't gotten to yet, but shouldn't be too confusing)

http://www.reffonomics.com/monopoly3.html Monopoly graph


1. Explain why the MR facing a competitive firm differs from the MR facing a monopolist.

2. Even if PC does not exist, why is it important to the study of microeconomics?

3. Why is the demand curve for a monopolist different from the PC demand curve?

4. Singer Diddy has a monopoly over a scarce resource: himself. He is the only person who can produce a Diddy concert. Does this fact imply that the government should regulate the prices of his concerts? Why or why not?

5. Why is the equality of marginal cost and marginal revenue essential for profit maximization in all market structures? Why can price be substituted for MR in the MR=MC rule when an industry is perfectly competitive?

6. Assume that a pure monopolist and a purely competitive firm have the same unit costs. Contrast the two with respect to (a) price, (b) output, (c) profits, and (d) allocation of resources. Since both monopolists and perfectly competitive firms follow the MC = MR rule in maximizing profits, how do you account for the different results? Why might the costs of a PC firm and a monopolist be different? What are the implications of such a cost difference?

Info for Monday

Hey there -

I know all of you were in class on Friday, but just a reminder - any posts you want to make this weekend are extra credit. :)

Papers are due Monday. Remember - use graphs to help you explain your point - cite your sources - make sure you have an intro & conclusion - about 4 pages. I know that sounds simplistic...but half of you didn't turn in a rough draft, so I'm nervous.

You will get a sheet on Monday outlining the things you must, gotta hafta know about PC. Take a look at the outline, the sites listed below, etc. Seriously - you HAVE to know this stuff, and we must move on to the other markets.

Have a nifty weekend - see you Tuesday -

Some things to think about in re: to perfect competition...

It's 4/5th hour, so I'm not positive how far we'll get, so this may be further along than we are in class. :)

1. The licorice industry is competitive. Each firm produces 2 million strings of licorice in a year. The strings have an average total cost of $.20 each, and they sell for $.30.
(a) What is the marginal cost of a string?
(b) Is this industry in long run equilibrium? Why or why not?

2. Bob's lawn mowing service is a profit-maximizing, competitive firm. Bob mows lawns for $27 each. His total cost each day is $280, of which $30 is a fixed cost. He mows 10 lawns a day. What can you say about Bob's short run decision regarding shut down and his long run decision regarding exit from the market?

3. Your best friend's long hours in the chemistry lab have finally paid off - she discovered a secret formula that allows people to do an hour's worth of studying in 5 minutes. So far, she's sold 200 doses, and faces the following ATC schedule: (Q--ATC) 199 -- $199, 200 -- $200, 201 -- $201. If a new customer offers to pay your friend $300 for one dose should she make one more? Explain.

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I'm off to read rough drafts! I should be able to hand a couple back today that were emailed to me earlier this week - otherwise, my goal is to have them back to you on Monday. We'll see how that goes...then, you have a week to rewrite - they're due on M 3/19. :) (Wow, the 3rd quarter ends that Friday after that, already!)

Costs/Perfect Competition

Here is the link to a ppt on perfect competition. It's in html format, so everyone should be able to access it. http://www.reffonomics.com/perfectcompetition/frame.htm And no, I didn't write it.

Second - some more links for your economics enjoyment -

Profit Maximization MR/MC stuff: http://apecon.us/allmeroth1aa.gif

And part II to that: http://apecon.us/allmeroth2aa.gif This will become more important as we get into the other three types of markets.

http://www.reffonomics.com/costs2/frame.htm for basic cost information. There are teacher instructions in the bottom frame that explain what's going on.

http://www.reffonomics.com/costs/frame.htm More costs stuff

http://www.reffonomics.com/shutdown2.html Costs & Shutdown rule

http://apecon.us/explicitandimplicit.gif explicit vs implicit costs

http://apecon.us/longrunshortrun.gif short run vs long run

http://www.reffonomics.com/longrunatccurve.html Long run ATC

http://www.reffonomics.com/typesofcompetition.html Types of competition

http://www.reffonomics.com/spectrumofcompetition.html Spectrum of competition

There are a lot more, this guy has tons of info. But...I think that's enough to start with. :)

Note: He does separate oligopoly & cartel, which are together in your book.


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Costs...

Consider the following costs for a pizzaria. They go in order of Q in dozens/TC/VC
0/$300/$0
1/$350/$50
2/$390/$90
3/$420/$120
4/$450/$150
5/$490/$190
6/$540/$240

a. What is the fixed cost? how do you know?

b. What is the marginal cost per dozen pizzas using TC? What is the marginal cost per dozen pizzas using VC? What is the relationship between the two?