101 exam 3 review
TRANSCRIPT
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Microeconomics
Exam 3 Review
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ExternalityBenefits or Coststo
someone else- Third Party-Positive or
Negative
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Government Intervention
Subsidize Positives
Tax and Regulate Negatives
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Asymmetric InformationNot Equal
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Moral HazardAct different because
someone else will pay the costs
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Price Discrimination
Charging different people a different price for the same
product
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MonopolyIncrease profits by reducing quantity
and increasing price
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Demand CurvesPerfect Competition -
FlatMonopoly - Downward
Oligopoly - Unknown
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Types of MonopolyOne Price
Two Price - CouponsMulti-Price -
discrimination
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Prisoner’s DilemmaBest Choice
is the second choiceGreedy will end up
worst off
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Tragedy of the Commons
When everybody shares, the resource
is over-used
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Maximize ProfitsMR = MC
Perfect CompetitionPrice = MRMonopoly
Price > MR
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Q P TRP x Q
MR∆TR MC TC Profit
TR-TC1 50 50 50 28 28 222 45 90 40 28 56 343 40 120 30 28 84 364 35 140 20 28 112 285 30 150 10 28 140 106 25 150 0 28 168 -187 20 140 -10 28 196 -56