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| | {{Economics_Lectures}} | | {{Economics_Lectures}} |
| − | | + | There are three lectures remaining, including this one, and then there will be our final exam. As we did last, week, we will review some important concepts first, and then learn some new ones. The review will help you prepare both for the final exam and, if you choose, the CLEP exam. |
| − | There are there lectures remaining, including this one, and then there will be our final exam. As we did last, week, we will review some important concepts first, and then learn some new ones. The review will help you prepare both for the final exam and, if you choose, the CLEP exam. | |
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| | But first let's address a superb question asked by a student last week. He wondered whether the "economic rent" (the extra amount charged by a company above its costs, perhaps because it is a monopoly) is the same as the "deadweight loss." The answer is "yes": "economic rent" is a type of deadweight loss. Any time the price of a good is raised above its price in a perfectly competitive market, there will be buyers who will not pay the higher price and thus will lose out on the consumer surplus between the higher price and lower, competitive price. That loss in consumer surplus is a deadweight loss. | | But first let's address a superb question asked by a student last week. He wondered whether the "economic rent" (the extra amount charged by a company above its costs, perhaps because it is a monopoly) is the same as the "deadweight loss." The answer is "yes": "economic rent" is a type of deadweight loss. Any time the price of a good is raised above its price in a perfectly competitive market, there will be buyers who will not pay the higher price and thus will lose out on the consumer surplus between the higher price and lower, competitive price. That loss in consumer surplus is a deadweight loss. |
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| | 5. Max unionized all the employees in an industry and then tried to increase both their wages and the number of people employed. Is this possible? Are there conditions which would make it possible? | | 5. Max unionized all the employees in an industry and then tried to increase both their wages and the number of people employed. Is this possible? Are there conditions which would make it possible? |
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| − | 6. Suppose you manage a monopoly, and want to know the short-run and long-run conditions for shutting down. Explain them in terms of average variable cost (AVC), average total cost (ATC) and price (P).
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| − | 7. Sharon has to pay $10.50 to hire nine workers, and must increase the wage to $11 to hire a tenth worker. But the tenth worker will bring in $13 extra to the firm’s revenue. Does Sharon hire the tenth worker?
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| | [[Image:Econ13ab.jpg|right|250px|thumb|Figures A and B]] | | [[Image:Econ13ab.jpg|right|250px|thumb|Figures A and B]] |
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| | 7. Suppose that is your firm in Figure A (attached). What changes might enable you to move production to point D? | | 7. Suppose that is your firm in Figure A (attached). What changes might enable you to move production to point D? |
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| | + | 6. Suppose you manage a monopoly, and want to know the short-run and long-run conditions for shutting down. Explain them in terms of average variable cost (AVC), average total cost (ATC) and price (P). |
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| | + | 7. Sharon has to pay $10.50 to hire nine workers, and must increase the wage to $11 to hire a tenth worker. But the tenth worker will bring in $13 extra to the firm’s revenue. Does Sharon hire the tenth worker? |
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| | ===Honors:=== | | ===Honors:=== |