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Explain the story of the graphs above (the process of moving from one Long Run Competitive Equilibrium position to another):

Refer to Question 5.  How much money would this firm lose if it did not produce any output?  Formulas to help you out: TC = TFC + TVC TVC = Q x AVC Price Show your solution.  No solution, no credit. 

Assume this firm is trying to maximize Profit under Perfect Competition. How much is its Profit or Loss? Here are the formulas that you will need: Profit = TR – TC TR = Qty x Price TC = Qty x ATC Price Show your solution.  No solution, no credit.

A politician says “the middle class in this country is getting smaller and smaller”.  Tell me a story or give me an example that shows this is not always true (or at least, that the statistics are misleading).

  Why does the firm want to produce at Q2?

The absolute price of a luxury watch is $10,000.  The absolute price of a laptop  is $800.  a. Find the relative price of a laptop in terms of a luxury watch. b.  Give me the interpretation of your answer in A.  What is your answer in letter A really telling us?   Here is the formula that you will need:   Rel price of a laptop (in terms of a watch) =   Absolute price of a laptop —————————— Absolute price of a watch 

A Price Ceiling is meant to help consumers.  Why is it placed below the Equilibrium Point?  

Refer to the table below.  Using the new method to solve for the Herfindahl Index, would the government consider the scenario above acceptable?  Show your solution.  No solution, no credit.  Firms Market Share A 19 B 18 C 18 D 18 E 9 F 9 G 9

The absolute price of a luxury watch is $10,000.  The absolute price of a laptop  is $800.  a. Find the relative price of a luxury watch in terms of a laptop. b.  Give me the interpretation of your answer in A.  What is your answer in letter A really telling us?   Here is the formula that you will need:   Rel price of a watch (in terms of a laptop) =   Absolute price of a watch —————————— Absolute price of a laptop 

Fill up the empty boxes labeled G, H, I, J, K, and L.  Only these boxes, nothing else.  Write your answers in the space provided below; there is no need to create your own table to write your answers. SUMMARY OF CHARACTERISTICS OF 4 MARKET STRUCTURES   Perfect Competition Monopoly Monopolistic Competition Oligopoly Sellers and Buyers Many sellers and buyers       Products Homogeneous products (aluminum)       Entry and Exit Entry and exit are easy G H I Relevant Info Buyers and sellers have all the relevant info they need N/A N/A N/A Long Run Economic Profit No Economic Profit in the long run J K L