Reading Activity for GLS Chapter 8, 9, 11.7 – Firm Behavior Terms Definitions Wh
ID: 1151923 • Letter: R
Question
Reading Activity for GLS Chapter 8, 9, 11.7 – Firm Behavior
Terms
Definitions
What are barriers to entry?
What assumptions about perfect competition make firms in perfect competition “price takers”?
What are equations for:
Total revenue
Marginal revenue
Profit, version 1
Profit, version 2
Marginal profit
What’s the relationship between MR and P for a firm in a perfectly competitive market? Why?
What should a firm do in the short run if profit is negative at the quantity where MR = MC?
What should it do in the long run?
In a perfectly competitive market, what is required for a market outcome (some P and Q) to be a short-run equilibrium? What’s required for a market outcome to be a long-run equilibrium?
What makes an industry a constant-cost industry? An increasing-cost industry?
What’s a natural monopoly?
What is a network good?
What are three examples of product differentiation?
What are the key features of a monopolistically competitive market?
How is an oligopoly market structure different from the other three market structures studied in Chs. 8-9?
What’s the relationship between MR and P for a firm with market power? Why?
What is a firm’s mark-up?
What does the Lerner Index measure and how is it calculated?
Terms
Definitions
Explanation / Answer
Large number of sellers and homogeneous products make the firm's in competition price takers because they have no influence over the price.
TR=P*Q
MR=Change in TR/Change in Quantity.
Profit=TR-TC
Profit=p*q-w1X1-W2X2(where W1 and W2 are wages to factor of production and x1 and x2 are quantity of inputs)
Marginal profit=Change in total profit/Change in output.
If a question has multiple parts then an expert answers the first four parts.
Questions Answers. 1. Barriers to entry means new firm's cannot enter the market for a specific product due to patents,economies of scale or government regulation. 2.Large number of sellers and homogeneous products make the firm's in competition price takers because they have no influence over the price.
3.TR=P*Q
MR=Change in TR/Change in Quantity.
Profit=TR-TC
Profit=p*q-w1X1-W2X2(where W1 and W2 are wages to factor of production and x1 and x2 are quantity of inputs)
Marginal profit=Change in total profit/Change in output.
4. MR=P because MR overlaps AR curve which is also the demand curve.Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.