英文版微观经济学复习提纲Chapter 9. Monopoly markets

IGCSE经济期末考试复习重点(九年级)Topic 1: Basic economic problem1.the nature of economic problem（经济问题的本质）:The central economic problem is scarcity.（基本的经济问题是稀缺） Scarcity means the limited resources cannot satisfy people’s unlimited wants.（稀缺意味着有限的资源不能满足人类无限的欲望） It leads to: what to produce? How to produce? For whom to produce? （它导致：生产什么？如何生产？为谁生产？）2. opportunity cost （机会成本）: The benefits from the next best thing foregone.（所放弃的次优选择的收益）There is an opportunity cost when people have to make choices.（当人们做选择的时候出现机会成本）3. factors of production（生产要素）.1).Land: all natural resources used in production.（投入生产的所有自然资源） e.g. oil, fish.2).Labor: all the physical and mental contribution of employees. （所有雇员的脑力和体力投入）E.g. skilled/unskilled worker.3).Capital: man-made resources used to producing other things.（制造其它产品的人造资源）E.g. machines, tools, factories.4).Enterprise: the ability to run a business, organize the other three factors of production, take risk and make profits.(运作企业，组织其它三种生产要素，承担风险和利润的能力).eg. entrepreneur4. production possibility curve（生产可能性曲线）: A curve that shows the maximum combination of two types of products that can be produced with existing resources.(描述现有资源可以制造的两种产品的最大组合的曲线)5. Market system: (private sector)（市场经济体制）1) Meant: The resources owned by producers and consumers,（制造者和消费者拥有资源）demand and supply decide prices,（需求和供给决定价格） resources allocated by price mechanism,（价格机制用于分配资源） firms aim to make most profits,（企业目标是最大利润） the economy work efficiently,（经济运作有效率） but it lacks of government intervention.（但没有政府干涉）2) Advantages（优点）:①It produce a wide variety of goods and services to satisfy consumers’ wants.（制造大量的多种多样的产品和服务满足消费者欲望）②It responds quickly to changes in consumer wants.（快速对消费者欲望变化做出反应）③It encourages innovations in products and new, more efficient methods of productionbecause firms competition, （鼓励产品创新和更有效率的生产方式因为企业竞争）production become more efficient,（生产变得更有效率） lower costs and increase sales and profit.（降低成本，增加销售和利润）④There are no taxes on incomes and wealth or on goods and services.（对收入、财富或产品和服务没有税）3) Disadvantages（缺点）:①Only profitable goods and services will be provided.（仅仅有利润的产品和服务被提供） It fails to provide public and merit goods. （不能提供公共品和优值品）②Resources will only be employed if it’s profitable to do so.（资源只有有利润的时候才会被使用）③Harmful goods may be produced and available because of profits,（有害产品会被制造和提供） such as drugs and weapons（比如毒品和武器）.④Producers may ignore harmful effects of their production on environment or people’s health .（制造者忽视生产对环境或健康带来的有害影响）⑤Some monopoly firms may dominate the supply of a good or service and charge high prices.（一些垄断公司控制产品和服务的供给并提高价格）⑥Firms will only supply products to consumers who are able to pay for them.（企业仅仅供给产品给有能力支付的消费者）6. Mixed system: (how to allocated resources in mixed economy)In the mixed system, both private-sector and public sector owned and controls scarce resources, producers, consumers and government decides what and how to produce.（在混合经济体制中，私有部门和公共部门拥有和控制稀缺资源，制造者、消费者和政府决定生产什么和如何生产）①private sector own scarce resources with the aim of making most profit. (私有部门拥有稀缺资源，生产目的是利润最大化)②government organize resources to provide some goods and services to people in need and can also use laws and regulations to control harmful activities.（政府组织资源去提供人们需要的产品和服务，同时使用法律和法规去控制有害活动）7. The advantages of mixed system :It attempts to overcome the disadvantages of a market economy by using government intervention to regulate different markets.（它企图通过使用政府干涉来规范不同的市场，克服市场经济体制的缺点）① Government can provide public goods and merit goods; it can raise money by taxes.（政府提供公共品和优值品，通过税收筹集资金）② In a mixed economy, the public sector can employ people who may otherwise be unemployed and provide unemployed benefits and payments to low incomes people.（混合经济体制中，公共部门雇佣工人）③ Government may stop consuming harmful goods by making them illegal or placing high taxes.(政府通过使其不合法或高税收来阻止消费有害产品)④ In a mixed economy, government can protect the natural environment or people’s health and safety by tax, laws and regulations.(混合经济体制中，政府通过税收、法律法规来保护环境和人们健康)⑤ Monopoly can regulate by government to keep low prices, or be broken up into smaller firms to increase competition and choice.（政府规范垄断企业控制价格，引导小企业加入行业增强竞争和选择）Topic 2: market forces and market failureSection1: market price(市场价格)1. What determines the demand for a product?（影响产品需求的因素有哪些？）1) Changes in the price of a product causes a movement along the demand curve;（产品价格的变化导致沿着需求曲线的滑动）2) Changes in consumer’s income and taxes on income;（消费者收入和收入税的变化）3) The prices of complements and substitutes;（互补品和替代品的价格）4) Changes in tastes, habit, fashion and popularity;（口味、习惯、时尚、流行的变化）5) Advertising;(广告)6) Changes in population;(size, age structure)（人口的变化，比如规模、年龄结构）7) Other factors: weather; interest rates; law.（其它因素：天气、利息率、法律等）2. What determines the supply for a product?（影响产品需求的因素有哪些？）1) Changes in the price of a product causes a movement along the supply curve; （产品价格的变化导致沿着供给曲线的滑动）2) Changes in the cost of factors of production: wages ,material, rent ,social security;（生产要素成本的变化：工资、原材料、租金、社会保障等）3) Technical progress;（技术进步）4) Business optimism （企业乐观）5) Governments subsidy and indirect taxes（政府补贴和间接税）6) Changes in other products’ profits（其它企业利润的变化）7) Other factors: weather, war, natural disaster, political factors.（其它因素：天气、战争、自然灾害、政治因素等）3. Explain, with example, what are complements and substitutes.（举例解释互补品和替代品的定义）Complementary goods are products that needs to be consumed together, such as car and petrol.（需要一起消费的产品，比如汽车和汽油）Substitutes are products that similar and compete to satisfy the same consumer demand, such as coffee and tea. （产品相似都能满足一种消费者需要，相互替代。

曼昆的《微观经济学基础》课业笔记英文版IntroductionThis document presents my notes on "Microeconomics: Principles and Applications" by N. Gregory Mankiw. These notes summarize key concepts and ideas covered in the book, aiming to provide a helpful overview of microeconomics.Chapter 1: Ten Principles of Economics- People face trade-offs: individuals and societies must make choices due to scarcity.- The cost of something is what you give up to get it: when making decisions, considering both the direct and opportunity costs is crucial.- Rational people think at the margin: making decisions by evaluating incremental benefits and costs.- People respond to incentives: incentives can influence individuals' behavior and decision-making.- Trade can make everyone better off: voluntary exchange benefits all parties involved.- Markets are usually a good way to organize economic activity: markets coordinate exchanges efficiently.- A country's standard of living depends on its ability to produce goods and services: productivity is key.- Prices rise when the government prints too much money: inflation can be caused by excessive money supply growth.- Society faces a short-run trade-off between inflation and unemployment: the Phillips curve illustrates this trade-off.Chapter 2: Thinking Like an Economist- Economists use models to simplify reality and understand economic behavior.- Assumptions in economic models help focus on essential elements.- Opportunity cost is the true cost of something and is measured by what we give up to obtain it.Chapter 3: Interdependence and the Gains from Trade- Specialization and international trade result in greater production efficiency and consumption possibilities.- Both parties benefit from trade even if one has an absolute advantage in both goods.- Prices reflect the opportunity cost and guide resources to their most valued uses.Chapter 4: The Market Forces of Supply and Demand- Markets consist of buyers and sellers, and their interactions determine prices and quantities.- Demand curve shows the relationship between price and quantity demanded, while supply curve reflects the relationship between price and quantity supplied.- Market equilibrium occurs when quantity demanded equals quantity supplied.- Changes in demand or supply shift their respective curves, leading to changes in equilibrium price and quantity.ConclusionThese notes provide a brief summary of the key concepts covered in "Microeconomics: Principles and Applications." Studying this bookallows for a deeper understanding of microeconomic principles and their applications in the real world.。

10Monopolistic Competition: The Competitive Model in a More RealisticSettingChapter SummaryMost markets in Australia have many buyers and sellers, low entry barriers and differentiated goods and services for sale. These are characteristics of monopolistic competition. Each monopolistically competitive firm faces a downward-sloping demand curve so marginal revenue is less than price. Firms maximise profit by producing the level of output that makes marginal revenue equal marginal cost. The firm may earn an economic profit or suffer an economic loss in the short run. Since there are low entry barriers, economic profits will cause new firms to enter the market. A firm that earns short-run profits will earn zero economic profit in the long run as entry from new firms shifts the firm’s demand curve to the left and causes it to become more elastic. If a firm suffers economic losses in the short run, other firms will exit the market and shift the firm’s demand curve to the right and cause it to become less elastic. In the long run, the firm’s demand curve will be tangent to its long-run average total cost curve, but average total cost will be greater than its minimum level.Monopolistic competition and perfect competition differ in their long-run equilibrium positions. Monopolistically competitive firms charge a price greater than marginal cost and they do not produce at minimum average total cost. A monopolistically competitive firm has excess capacity. If it increases its output it could produce at a lower average cost. But consumers benefit from being able to purchase a product that is differentiated and more closely suited to their tastes.Firms can use marketing to differentiate their products. Marketing tools include brand management and advertising.Learning ObjectivesWhen you finish this chapter you should be able to:1.Explain why a monopolistically competitive firm has a downward-sloping demand curve.A monopolistically competitive firm is able to raise its price without losing all of its customers.Some customers are willing to pay the higher price because the firm has a favourable location, can offer better service or a higher quality product, among other reasons.2.Explain how a monopolistically competitive firm decides the quantity to produce and theprice to charge. All firms maximise profits by producing where marginal revenue is equal to marginal cost. Since price is greater than marginal revenue, a monopolistically competitive firmMonopolistic competition: the competitive market in a more realistic setting 154 produces where price is greater than marginal cost. The firm will earn economic profits if its price exceeds average total cost in the short run.3.Analyse the situation of a monopolistically competitive firm in the long run. Since entrybarriers are low in monopolistically competitive industries, short-run profits give entrepreneurs an incentive to enter the market and establish new firms. The entry of new firms will shift the demand curves of existing firms to the left and make them more elastic. If firms suffer short-run economic losses, some firms will exit the industry in the long run. This will shift the demand curves of remaining firms to the right and make them more inelastic. In the long run, the demand curve of a typical firm will be tangent to its average total cost curve.pare the efficiency of monopolistic competition and perfect competition. In the long runthe profit-maximising level of output for a monopolistically competitive firm occurs where price is greater than marginal cost and the firm is not at the minimum point of its average total cost curve. Unlike a perfectly competitive firm, a monopolistically competitive firm does not achieve allocative efficiency or productive efficiency.5.Define marketing and explain how firms use it to differentiate their products. Marketingrefers to all the activities necessary for a firm to sell a product to consumers. Firms use brand management and advertising to earn profits and defend profits from competitors.6.Identify the key factors that determine a firm’s profitability. The most important factorsunder a firm’s control are its ability to differentiate its product and to produce at a lower average cost than competing firms. Other factors that affect profitability are not under a firm’s control.These factors include the prices of the inputs it uses in production and random chance. Chapter ReviewChapter Opener: Starbucks: Growth through Product DifferentiationSince the first Starbucks coffee shop opened in 1971, the firm has grown into a worldwide company. But the growth has been in the number of shops, over 8,000, rather than the size of the shops themselves. Starbucks faces competition from other firms. Neighbourhoods often have three or more coffeehouses. Barriers to entry into the market for coffeehouses are low and firms differentiate their products by offering different menus and services.Demand and Marginal Revenue for a Firm in a Monopolistically Competitive MarketMonopolistic competition is a market structure in which barriers to entry are low, and many firms compete by selling similar, but not identical, products. Production differentiation allows monopolistically competitive firms to raise their prices without losing all their customers. (A price increase will, however, cause some customers to switch to another similar product.)The control monopolistically competitive firms have over their prices is limited because they face competition from firms selling similar products. Since firms face downward-sloping demand curves when marginal revenue is less than price.10155 ChapterHelpful Study HintRestaurants, convenience stores, bookstores and petrol stations are all examples ofmonopolistically competitive firms. Petrol stations display their prices so thatdifferences between stations can easily be compared. Many motorists are willing tobuy at a slightly higher per litre price if a station is in a more convenient location thana station that offers a lower price. Some consumers believe there are differencesbetween various brands of petrol. These customers are willing to pay a somewhathigher price for what they perceive as a superior product. The next time you drive orride in a car, notice how much difference there is between the prices charged by thestations you pass.How a Monopolistically Competitive Firm Maximises Profits in the Short RunAs with firms in other markets, a monopolistically competitive firm will maximise profits by producing the level of output that makes marginal revenue (MR) equal to marginal cost (MC). Because the MR curve lies below the firm’s demand curve, the firm will maximise profits where price (P) exceeds MC.Helpful Study HintThe table and graph in Figure 10.4 provide an example of a firm that makes a short-run profit. Notice that (a) the relevant values for MR, MC and ATC are determined atthe profit-maximising quantity, or where MR=MC, (b) when firms earn profits theATC curve crosses the demand curve at two points, and (c) at the profit maximisingoutput P > MR.What Happens to Profits in the Long Run?Short-run profits give entrepreneurs an incentive to enter a market and establish new firms. The demand curve of an established firm shifts to the left as new firms enter the market. Entry will continue until the firm’s demand curve is tangent to its ATC curve. In the long run, the firm’s price will equal average total cost, the firm breaks even and the firm’s demand curve becomes more elastic.Short-run losses will lead some firms to exit their market. As a result, the demand curve for a firm remaining in the market shifts to the right and becomes less elastic. The exit of firms continues until the representative firm can charge a price equal to the average total cost in the long run.Monopolistic competition: the competitive market in a more realistic setting 156Helpful Study HintThis section of the textbook contains several features to help you understand thetransition of the market from short-run to long-run equilibrium. Don’t Let ThisHappen to You! (pages 321-2) warns you not to confuse economic and accountingprofit. Graphs in Figure 10.5 (page 320) illustrate the short run for a firm earningprofits and how these profits are eliminated in the long run firm. Table 10.2 (page321) offers a comprehensive graphical summary of the short run and long run for amonopolistically competitive firm. Making the Connection 10.1 (page 322) andSolved Problem 10.2 (page 322) use the experience of Apple Computers to analysethe short run and long run under monopolistic competition. Making the Connection10.2 describes the efforts of a cosmetics company to stay ahead of its competition.Comparing Perfect Competition and Monopolistic CompetitionThere are two important differences between long-run equilibrium perfect competition and monopolistic competition. Monopolistically competitive firms charge a price greater than marginal cost and they do not produce at minimum average total cost. Since price exceeds marginal cost, allocative efficiency is not achieved, and since price is greater than minimum average total cost, productive efficiency is not achieved. Monopolistically competitive firms have excess capacity. Despite these characteristics, consumers benefit from purchasing products that are differentiated.Helpful Study HintAlthough monopolistic competition appears to fall short of perfect competition interms of economic efficiency, the textbook rightly notes that consumers are willing topay for the variety offered by monopolistically competitive firms. Consider usingpetrol stations once again as an example. Let’s say there are three petrol stations on asingle street corner. During most hours of the day at least one or two of the stationsare not busy; one can interpret this as excess capacity. But during rush hours all threestations have customers. Enough drivers are willing to pay to keep all three stationsoperating for the convenience of not waiting in long lines during peak hours.Supermarkets offer another example of consumers’ willingness to pay for greaterconvenience. Most supermarkets open additional check-out lines – some forconsumers with just a few items to buy – when long lines start to form.How Marketing Differentiates ProductsFirms can differentiate their products through marketing. Marketing refers to all the activities necessary for a firm to sell a product to a consumer. Firms use two marketing tools to differentiate their products. The first marketing tool is brand management. Brand management refers to the actions of a firm157 Chapter10intended to maintain the differentiation of a product over time. Economic profits are earned when a firm introduces a new product, but this leads to the entry of firms producing similar products and the profits are eliminated. Firms use brand management to put off the time when they will no longer be able to earn profits. The second marketing tool is advertising. Advertising shifts the demand curve for a product to the right and makes the demand curve more inelastic. Successful advertising allows the firm to sell more at every price. Advertising also increases costs. If the increase in revenue from advertising exceeds the costs, profits will rise.Once a firm has established a brand name it has an incentive to defend it. Firms can apply for a trademark. A trademark grants legal protection against other firms using a product’s name. Companies will spend substantial amounts of money to ensure that their brand names are entitled to legal protection. If firms do not prevent the unauthorised use of their trademarks, they may be no longer entitled to legal protection.What Makes a Firm Successful?A firm can control some of the factors that allow it to make economic profits. Other factors are uncontrollable. Controllable factors include the ability a firm has to differentiate its product and the ability a firm has to produce at a lower average total cost than competing firms. Uncontrollable factors include input prices, changes in consumer tastes and random chance.Solved ProblemChapter 10 in the textbook includes two Solved Problems to support learning objectives 2 (“Explain how a monopolistically competitive firm decides the quantity to produce and the price to charge”) and 3 (“Analyse the situation of a monopolistically competitive firm in the long run”). The following Solved Problem supports another of this chapter’s learning objectives.Solved Problem 12-3 Supports learning objective 5: Define marketing and explain how firms use it to differentiate their products.We Came. We Marketed. We Sold.3Com Corporation was incorporated in the U.S. in 1979 and specialises in providing computer network devices such as routers and network switches. Among 3Com’s clients are businesses that want to improve the communication and security capabilities of their computer systems. 3Com is not a household name in the manner of McDonald’s or Microsoft, but marketing is an important part of the company’s success. It faces stiff competition from other computer service providers, such as Cisco Systems, and uses advertising and trademarks to influence its customers. 3Com’s advertising efforts are aimed primarily at computer network managers; for example, an advertising agency developed a two-page ad for 3Com titled “We Came. We Saw. We Routed.” Ads such as these are placed in publications most likely to be seen by the target audience. It would be less effective for 3Com to place ads in People or Time magazines, since few of their readers are computer network managers, than it would be to advertise in business publications. The importance of establishing and maintaining 3Com’s trademarks is indicated by the guidelines the firm’s legal experts issue to employees. The following is a small sample of these guidelines for over 40 company and product trademarks:Always Use a Trademark as an Adjective, Followed by the Appropriate Description(s).If not, the trademark could become generic…make sure that 3Com and the ® symbol(3Com®) precedes a trademark mention of the product or service.Monopolistic competition: the competitive market in a more realistic setting 158 Correct: The 3Com® NBX® business telephone has powerful call processingfeatures. Incorrect: NBX® has powerful call-processing features.Sources: /corpinfo/en_US/legal/trademark/tmn_list.html/Portfolio/Advertising/advertising.html(a) Define marketing and explain the importance of marketing to firms.(b) Explain how 3Com Corporation uses marketing to differentiate its products.Solving the ProblemStep 1: Review the chapter material. Since this refers to the material in “How Marketing Differentiates Products,” you may want to review this section of the textbook which begins on page 327.Step 2: Define marketing and explain the importance of marketing to firms. Marketing refers to all the activities necessary for a firm to sell a product to a consumer. To earn profits, monopolistically competitive firms must differentiate their products. These firms use two marketing tools to do this: brand management and advertising.Step 3: Explain how 3Com Corporation uses marketing to differentiate its products. 3Com Corporation uses brand management, including extensive use of trademarks, and advertising to differentiate its products. 3Com Corporation focuses its marketing strategies on its customers; such as computer network managers.Self-Test(Answers are provided at the end of the Self-Test.)Multiple-Choice Questions1Why does a monopolistically competitive firm have a downward-sloping demand curve?a Because the firm is considered to be a monopoly in its own market.b Because changing the price will affect the quantity sold.c Because the firm is close to a price taker, like a wheat farmer.d Because the level of output produced depends on the cost structure of the firm.2In which case is the firm’s demand curve the same as marginal revenue?a In the monopolistically competitive case.b In the perfectly competitive case.c In both the monopolistically competitive case and the perfectly competitive case.d In neither the monopolistically competitive case nor the perfectly competitive case.3Which of the following measures is conceptually the same as price?a Marginal revenue.b Total revenue.c Average revenue.d None of the above.159 Chapter104When a monopolistically competitive firm cuts price, good and bad things happen. Which of the following is considered a good thing?a The price effect.b The output effect.c The revenue effect.d All of the above are good things.5Refer to the table below. What is the average revenue associated with the sixth unit of output produced and sold?a$3.00b$2.00c$0.50d None of the above. There is insufficient information to answer the question.6Refer to the figure below. A downward move along the demand curve results in a gain and a loss of revenue. Which area represents the loss of revenue?a Area A.b Area B.c Both A and B represent revenue losses.d An area not shown.Monopolistic competition: the competitive market in a more realistic setting 1607If a firm has the ability to affect the price of the good or service it sells, what is the relationship between its marginal revenue curve and its demand curve?a The firm will have a marginal revenue curve that is above its demand curve.b The firm will have a marginal revenue curve that is below its demand curve.c The firm will have a marginal revenue curve that is the same as its demand curve.d The firm will have an upward-sloping marginal revenue curve and a downward-slopingdemand curve.8Which of the following types of firms use the marginal revenue equals marginal cost approach to maximise profits?a Perfectly competitive firms.b Monopolistically competitive firms.c Both perfectly competitive and monopolistically competitive firms.d Neither perfectly competitive nor monopolistically competitive firms.9Refer to the figure below. In order to maximise profit, what price should the firm charge?a$18b$15c$8d$410Refer to the figure below. Which firm is maximising profits?a The firm on the left.b The firm on the right.c Both firms.d Neither firm.161 Chapter1011Refer to the figure below. When total cost is subtracted from total revenue, which area remains?a Area A.b Area B.c Area A + B.d None of the above. That information cannot be obtained from this graph.Monopolistic competition: the competitive market in a more realistic setting 162 12Refer to the table below. What level of output should be produced in order to maximise profit?a 1 unit of output.b 5 units of output.c 6 units of output.d10 units of output.13How does the entry of new coffeehouses affect the profits of existing coffeehouses?a Entry will shift the market demand curve for coffee to the right.b Entry will shift the firm’s demand curve to the right.c Entry will make the firm’s demand curve more elastic.d Entry will in no way affect the profits of existing coffeehouses.14Refer to the figure below. Which graph depicts a situation in which firms might exit the industry?a The graph on the left.b The graph in the middle.c The graph on the right.d None of the above.15Refer to the figure below. Which graph best depicts the profit or loss situation for a monopolistically competitive firm in the long run?a The graph on the left.b The graph in the middle.c The graph on the right.d None of the above.16For a monopolistically competitive firm, is zero economic profit inevitable in the long run?a Yes. There is nothing the firm can do to avoid zero economic profit in the long run.b No. A firm could try to avoid losing its profit in the long run by producing a productidentical to those of competing firms.c No. A firm could try to avoid losing profits by reducing production costs and improvingits products.d No. A firm could simply offer goods that are cheaper to produce even if they have lessvalue than those offered by competing firms.17Refer to the graph below. Which equilibrium level of output indicates excess capacity?a Q1.b Q2.c Both Q1 and Q2.d Neither Q1 nor Q2.18What trade-offs do consumers face when buying a product from a monopolistically competitive firm?a Consumers pay a lower price but also have fewer choices.b Consumers pay a price greater than marginal cost but also have choices more suited totheir tastes.c Consumers pay a higher price but are happy knowing that the industry is highly efficient.d Consumers pay a price as low as the competitive price but have difficulty finding andbuying the product.19What is the term given to the actions of a firm intended to maintain the differentiation of a product over time?a Brand management.b Advertising.c Marketing.d Campaigning.20Refer to the figure below. Which of the following terms is missing in the box on the right?a Brand management.b Marketing.c Profitability.d Demand.Short Answer Questions1.Describe how Starbucks has used brand management to differentiate its products.2.What is the most important characteristic that perfectly competitive and monopolisticallycompetitive firms have in common?3.Why is it not possible for a monopolistically competitive firm to produce at minimum averagetotal cost in long run equilibrium?4.The overall strength of the economy has an important influence on the profits of firms. Althoughfirms cannot affect the economy’s performance, knowledge of how economy-wide changes affect the demand for their products can help firms respond to these changes. What product information would be most useful for firms to have?5.Some of Coca-Cola’s employees are required to visit restaurants and bars and order mixeddrinks. What motivation would Coca-Cola have to encourage their employees to “drink on the job?”True/False QuestionsT F 1. The marginal revenue curve lies below the demand curve for any firm that hasthe ability to affect the price of the product it sells.T F 2. Monopolistically competitive firms charge a price greater than marginal costin both the short run and the long run.T F 3. Unlike perfectly competitive firms, monopolistically competitive firms earnlong run profits.T F 4. When some firms exit a monopolistically competitive market, the demand curves of firms that remain become less elastic.T F 5. Among the factors that make a firm successful but are not under its control isthe ability to differentiate its product.T F 6. Brand management refers to all activities necessary for a firm to sell a productto a consumer.T F 7. Unlike perfectly competitive firms, monopolistically competitive firms haveexcess capacity.T F 8. Because a monopolistically competitive firm has a downward sloping demandcurve, marginal revenue will always be lower than price.T F 9. An important reason why Starbucks has been able to maintain control over theoperations of its coffeehouses is that they are all company-owned, notfranchises.T F 10. One motive for advertising is to make the demand for a product more elasticso that when price is lowered there will be a greater increase in quantitydemanded.Answers to the Self-TestMultiple-Choice QuestionsQuestion Answer Explanation1 b Because changing the price affects the quantity sold, a monopolisticallycompetitive firm will face a downward-sloping demand curve, rather than the horizontal demand curve faced by a competitive firm, like a wheat farmer. 2 bA perfectly competitive firm faces a horizontal demand curve and does not have to cut the price in order to sell a larger quantity. A monopolistically competitive firm, however, must cut the price to sell more, so its marginal revenue curve will slope downward and will be below its demand curve. 3 cPrice is revenue per unit, or average revenue. Average revenue is equal to total revenue divided by quantity. Because total revenue equals price multiplied by quantity, dividing by quantity leaves just price. Therefore, average revenue is always equal to price. This will be true for firms in any of the four market structures. 4 bWhen the firm cuts the price by $0.50, one good thing and one bad thing happen: The good thing: It sells one more café latte; we can call this the output effect. The bad thing: It receives $.050 less for each café latte that it could have sold at the higher price; we can call this the price effect. 5 aAverage revenue equals price, which is $6.00 when six units are sold. Or, average revenue equals total revenue divided by output, or $18.00/6 = $3.00. 6 aArea A shows the loss of revenue from a price cut = $.50 x 5 = $2.50. 7 bEvery firm that has the ability to affect the price of the good or service it sells will have a marginal revenue curve that is below its demand curve. Only firms in perfectly competitive markets, which can sell as many units as they want at the market price, have marginal revenue curves that are the same as their demand curves. 8 cAll firms use the same approach to maximise profits: Produce where marginal revenue is equal to marginal cost. 9 bMarginal cost equals marginal revenue when 900 units of output are produced and sold. Consumers are willing to pay $15 for 900 units. 1 cIn both cases, the output level is set where marginal revenue equals marginal cost. 11 aCorrect. Profit = (P – ATC) Q, or alternatively, Profit = TR – TC, where TR = P x Q, and TC = ATC x Q. 12 b At this level of output, marginal revenue of $1.50 equals marginal cost.13 c As new coffeehouses open, the firm’s demand curve will shift to the left. Thedemand curve will shift because the existing firms will sell fewer cups of coffeeat each price now that there are additional coffee coffeehouses in the area selling similar drinks. The demand curve will also become more elastic becauseconsumers in the area now have additional coffeehouses from which to buycoffee, so existing firms will lose more customers if they raise their prices.14 b Since price is less than average total cost, the firm is suffering losses. Firm losses will lead to the exit of some firms in the industry.15 b In the long run, a monopolistically competitive firm earns zero economic profit, or P = ATC.16 c Firms try to avoid losing profits by reducing the cost of producing their products,by improving their products, or by convincing consumers their products areindeed different from what competitors offer. To stay one step ahead of itscompetitors, a firm has to offer consumers goods or services that they perceiveto have greater value than those offered by competing firms.17 a The monopolistically competitive firm has excess capacity equal to thedifference between its profit-maximising level of output and the productivelyefficient level of output.18 bConsumers face a trade-off when buying the product of a monopolisticallycompetitive firm: They are paying a price that is greater than marginal cost andthe product is not being produced at minimum average cost, but they benefit from being able to purchase a product that is differentiated and more closelysuited to their tastes.19 a The actions of a firm intended to maintain the differentiation of a product over time are called brand management.20 c The factors under a firm’s control—the ability to differentiate its product and theability to produce it at lower cost—combine with the factors beyond its controlto determine the firm’s profitability.Short Answer Responses1. The textbook describe several brand management methods Starbucks uses to differentiate itsproducts. “Competitors have found it difficult to duplicate Starbucks’ European espresso bar atmosphere…Most importantly, Starbucks has continued to be very responsive to its customers’ preferences…” In addition, company-owned coffeehouses (rather than franchise businesses) enable Starbucks to have greater control of the products sold and how they are marketed. Despite the success it has enjoyed, low entry barriers will eventually enable other firms to copy much of what Starbucks has done. Starbucks must continue to use brand management techniques to postpone the time when its economic profits are eliminated.2. Low entry barriers are common to both market structures. This ensures that firms earn zeroeconomic profits in the long run.。

P 23 The opportunity cost of any choice is what we must forego when we make that choice.P29 生产可能性边界Production possibilities frontier is giving the different combinations of goods that can be produced with the resources and technology currently available.P30 According to 机会成本递增规律the law of increasing opportunity cost, the most of something we produce, the greater the opportunity cost of producing even more of it.P57 In 非完全竞争市场imperfectly competitive markets, individual buyers or sellers can influence the price of the product.P58 In完全竞争市场perfectly competitive markets, each individual buyers or sellers takes the market price as a given.P62 A change in the price of good cause a movement along the demand curve.P75 The equilibrium price and equilibrium quantity are values for price and quantity in the market that, once achieved, will remain constant- unless and until the supply curve or the demand curve shifts. P85 A consumer’s budget constraint 预算约束identifies which combinations of goods and services the consumer can afford with a limited budget, at given prices.P108 marginal utility边际效用 is the change in utility an individual enjoys from consuming an additional unit of a good.P130 an indif ference curve无差异曲线 represents all combinations of two goods that make the consumer equally well off.P145 the law of diminishing marginal returns边际收益递减规律states that as we continue to add more of any one input, its marginal product will eventually decline.P217 in the long run , every competitive firm will earn normal profit 正常利润that is ,zero economic profit.P232 a monopoly firm is the only seller of a good or service with no close substitutes. The market in which the monopoly firm operates is called a monopoly market.垄断市场P260 another form of tacit collusion is price leadership, in which one firm, the price leader, sets its price, and other sellers copy that price.P275 price discrimination 价格歧视occurs when a firm charges different prices to different customers for reasons other than different in cost.P253 an oligopoly寡头 is a market dominated by a small num ber of strategically interdependent firms.P160规模经济economic of scale------total cost rise proportionately ````P117 The income effect -----a price change arises from a change from purchasing. P 23 The opportunity cost of any choice is what we must forego when we make that choice.P29 生产可能性边界Production possibilities frontier is giving the different combinations of goods that can be produced with the resources and technology currently available.P30 According to 机会成本递增规律the law of increasing opportunity cost, the most of something we produce, the greater the opportunity cost of producing even more of it.P57 In 非完全竞争市场imperfectly competitive markets, individual buyers or sellers can influence the price of the product.P58 In完全竞争市场perfectly competitive markets, each individual buyers or sellers takes the market price as a given.P62 A change in the price of good cause a movement along the demand curve.P75 The equilibrium price and equilibrium quantity are values for price and quantity in the market that, once achieved, will remain constant- unless and until the supply curve or the demand curve shifts. P85 A consumer’s budget constraint 预算约束identifies which combinations of goods and services the consumer can afford with a limited budget, at given prices.P108 marginal utility边际效用 is the change in utility an individual enjoys from consuming an additional unit of a good.P130 an indif ference curve无差异曲线 represents all combinations of two goods that make the consumer equally well off.P145 the law of diminishing marginal returns边际收益递减规律states that as we continue to add more of any one input, its marginal product will eventually decline.P217 in the long run , every competitive firm will earn normal profit 正常利润that is ,zero economic profit.P232 a monopoly firm is the only seller of a good or service with no close substitutes. The market in which the monopoly firm operates is called a monopoly market.垄断市场P260 another form of tacit collusion is price leadership, in which one firm, the price leader, sets its price, and other sellers copy that price.P275 price discrimination 价格歧视occurs when a firm charges different prices to different customers for reasons other than different in cost.P253 an oligopoly寡头 is a market dominated by a small num ber of strategically interdependent firms.P160规模经济economic of scale------total cost rise proportionately ````P117 The income effect -----a price change arises from a change from purchasing.。

微观经济学关键概念中英文对照CHAPTER 1scarcity稀缺性economics经济学efficiency效率equity平等opportunity cost机会成本rational people理性人marginal changes边际变动incentive激励market economy市场经济property rights产权market failure市场失灵externality外部性market power市场势力productivity生产率inflation通货膨胀business cycle经济周期CHAPTER 2circular-flow diagram循环流向图production possibilities frontier生产可能性边界microeconomics微观经济学macroeconomics宏观经济学positive statements实证表述normative statements规范表述CHAPTER 3absolute advantage绝对优势opportunity cost机会成本comparative advantage比较优势imports进口exports出口CHAPTER 4market市场competitive market竞争市场quantity demanded需求量law of demand需求定理demand schedule需求表demand curve需求曲线normal good正常物品inferior good低档物品substitutes替代品complements互补品quantity supplied供给量law of supply供给定理supply schedule供给表supply curve供给曲线equilibrium均衡equilibrium price均衡价格equilibrium quantity均衡数量surplus过剩shortage短缺law of supply and demand供求定理CHAPTER 5elasticity弹性price elasticity of demand需求价格弹性total revenue总收益income elasticity of demand需求收入弹性cross-price elasticity of demand需求的交叉价格弹性price elasticity of supply供给价格弹性CHAPTER 6price ceiling价格上限price floor价格下限tax incidence税收归宿CHAPTER 7welfare economics福利经济学willingness to pay支付意愿consumer surplus消费者剩余cost成本producer surplus生产者剩余efficiency效率equity平等CHAPTER 8deadweight loss无谓损失CHAPTER 9world price世界价格tariff关税CHAPTER 10externality外部性internalizing the externality外部性的内在化Coase theorem科斯定理transaction costs交易成本corrective tax矫正税CHAPTER 11Excludability排他性rivalry in consumption消费中的竞争性private goods私人物品public goods公有物品common resources公有资源free rider搭便车者cost-benefit analysis成本收益分析Tragedy of the Commons公有地悲剧CHAPTER 12CHAPTER 13total revenue总收益total cost总成本profit利润explicit costs显性成本implicit costs隐性成本economic profit经济利润accounting profit会计利润production function生产函数marginal product边际产量diminishing marginal product边际产量递减fixed costs固定成本variable costs可变成本average total cost平均总成本average fixed cost平均固定成本average variable cost平均可变成本marginal cost边际成本efficient scale有效规模economies of scale规模经济diseconomies of scale规模不经济constant returns to scale规模收益不变CHAPTER 14competitive market竞争市场average revenue平均收益marginal revenue边际收益sunk cost沉没成本CHAPTER 15Monopoly垄断企业natural monopoly自然垄断price discrimination价格歧视CHAPTER 16Oligopoly寡头monopolistic competition垄断竞争collusion勾结cartel卡特尔Nash equilibrium纳什均衡game theory博弈论prisoners＇dilemma囚徒困境dominant strategy占优策略CHAPTER 17monopolistic competition垄断竞争CHAPTER 18factors of production生产要素production function生产函数marginal product of labor劳动的边际产量diminishing marginal product边际产量递减value of the marginal product边际产量值capital资本CHAPTER 19compensating differential补偿性工资差别human capital人力资本union工会strike罢工efficiency wages效率工资discrimination歧视CHAPTER 20poverty rate贫困率poverty line贫困线in-kind transfers实物转移支付life cycle生命周期permanent income持久收入utilitarianism功利主义utility效用liberalism自由主义maximin criterion最大化标准social insurance社会保障libertarianism自由意志主义welfare福利negative income负所得税微观部分1.经济学：研究资源如何最佳配置使人类需要得到最大满足的一门社会科学。

《微观经济学：利润最大化与竞争性供给》问答与练习（英文版含答案）PROFIT MAXIMIZATION AND COMPETITIVE SUPPLY1. Why would a firm that incurs losses choose to produce rather than shut down?Losses occur when revenues do not cover total costs. Revenues could still be greater thanvariable costs, but not fixed costs. If a firm is incurring a loss, it will seek to minimizethat loss. In the short run, losses will be minimized as long as the firm covers its variablecosts. In the long run, all costs are variable. Thus, all costs must be covered if the firmis to remain in business.2. The supply curve for a firm in the short run is the short-run marginal cost curve (above the point of minimum average variable cost). Why is the supply curve in the long run not the long-run marginal cost curve (above the point of minimum average total cost)?In the short run, a change in the market price induces the profit-maximizing firm tochange its optimal level of output. This optimal output occurs when price is equal tomarginal cost, as long as marginal cost exceeds average variable cost. Therefore, thesupply curve of the firm is its marginal cost curve, above average variable cost. (Whenthe price falls below average variable cost, the firm will shut down.)In the long run, the firm adjusts its inputs so that its long-run marginal cost is equal tothe market price. At this level of output, it is operating on a short-run marginal costcurve where short-run marginal cost is equal to price. As the long-run price changes,the firm gradually changes its mix of inputs to minimize cost. Thus, the long-run supplyresponse is this adjustment from one set of short-run marginal cost curves to another.3. In long-run equilibrium, all firms in the industry earn zero economic profit. Why is this true?The theory of perfect competition explicitly assumes that there are no entry or exitbarriers to new participants in an industry. With free entry, positive economic profitsinduce new entrants. As these firms enter, the supply curve shifts to the right, causinga fall in the equilibrium price of the product. Entry will stop, and equilibrium will beachieved, when economic profits have fallen to zero.4. What is the difference between economic profit and producer surplus?While economic profit is the difference between total revenue and total cost, producersurplus is the difference between total revenue and total variable cost. The differencebetween economic profit and producer surplus is the fixed cost of production.5. Why do firms enter an industry when they know that in the long run economic profit will be zero?Firms enter an industry when they expect to earn economic profit. These short-runprofits are enough to encourage entry. Zero economic profits in the long run implynormal returns to the factors of production, including the labor and capital of the ownersof firms. For example, the owner of a small business might experience positiveaccounting profits before the foregone wages from running the business are subtractedfrom these profits. If the revenue minus other costs is just equal to what could be earnedelsewhere, then the owner is indifferent to staying in business or exiting.6. At the beginning of the twentieth century, there were many small American automobile manufacturers. At the end of the century, there are only three large ones. Suppose that this situation is not the result of lax federal enforcement of antimonopoly laws. How do you explain the decrease in the number of manufacturers? (Hint: What is the inherent cost structure of the automobile industry?) Automobile plants are highly capital-intensive. Assuming there have been noimpediments to competition, increasing returns to scale can reduce the number of firmsin the long run. As firms grow, their costs decrease with increasing returns to scale.Larger firms are able to sell their product for a lower price and push out smaller firms inthe long run. Increasing returns may cease at some level of output, leaving more thanone firm in the industry.7. Industry X is characterized by perfect competition, so every firm in the industry is earning zero economic profit. If the product price falls, no firms can survive. Do you agree or disagree? Discuss.Disagree. As the market price falls, firms cut their production. If price falls belowaverage total cost, firms continue to produce in the short run and cease production in thelong run. If price falls below average variable costs, firms cease production in the shortrun. Therefore, with a small decrease in price, i.e., less than the difference between theprice and average variable cost, firms can survive. With larger price decrease,i.e.,greater than the difference between price and minimum average cost, no firms survive.8. An increase in the demand for video films also increases the salaries of actors and actresses. Is the long-run supply curve for films likely to be horizontal or upward sloping? Explain.The long-run supply curve depends on the cost structure of the industry. If there is a fixedsupply of actors and actresses, as more films are produced, higher salaries must be offered.Therefore, the industry experiences increasing costs. In an increasing-cost industry, thelong-run supply curve is upward sloping. Thus, the supply curve for videos would beupward sloping.9. True or false: A firm should always produce at an output at which long-run average cost is minimized. Explain.False. In the long run, under perfect competition, firms should produce where averagecosts are minimized. The long-run average cost curve is formed by determining theminimum cost at every level of output. In the short run, however, the firm might not beproducing the optimal long-run output. Thus, if there are any fixed factors of production,the firm does not always produce where long-run average cost is minimized.10. Can there be constant returns to scale in an industry with an upward-sloping supply curve? Explain.Constant returns to scale imply that proportional increases in all inputs yield the sameproportional increase in output. Proportional increases in inputs can induce higherprices if the supply curves for these inputs are upward sloping. Therefore, constantreturns to scale does not always imply long-run horizontal supply curves.11. What assumptions are necessary for a market to be perfectly competitive? In light of what you have learned in this chapter, why is each of these assumptions important?The two primary assumptions of perfect competition are (1) all firms in the industry areprice takers, and (2) there is free entry and exit of firms from the market. This chapterdiscusses how competitive equilibrium is achieved under these assumptions. In particular,we have seen that in a competitive equilibrium, price is equal to marginal cost. Bothassumptions insure this equilibrium condition in the long run. In the short run, pricecould be greater than average cost, implying positive economic profits. With free entryand exit, positive economic profits would encourage other firms to enter. This entryexerts downward pressure on price until price is equal to both marginal cost andminimum average cost.12. Suppose a competitive industry faces an increase in demand (i.e., the curve shifts upward). What are the steps by which a competitive market insures increased output? Does your answer change if the government imposes a price ceiling?If demand increases with fixed supply, price and profits increase. The price increaseinduces the firms in the industry to increase output. Also, with positive profit, firmsenter the industry, shifting the supply curve to the right. With an effective price ceiling,profit will be lower than without the ceiling, reducing the incentive for firms to enter theindustry. With zero economic profit, no firms enter and there is no shift in the supplycurve.13. The government passes a law that allows a substantial subsidy for every acre of land used to grow tobacco. How does this program affect the long-run supply curve for tobacco?A subsidy to tobacco pro duction decreases the firm’s costs of production. These costdecreases encourage other firms to enter tobacco production, and the supply curve for theindustry shifts out.1. From the data in Table 8.2, show what happens to the firm’s output ch oice and profit if the price of the product falls from $40 to $35.The table below shows the firm’s revenue and cost information when the price falls to $35.At a price of $35, the firm should produce seven units to maximize profits, because this isthe point closest to where price equals marginal cost without having marginal cost exceedprice.2. Again, from the data in Table 8.2, show what happens to the firm’s output choice and profit if the fixed cost of production increases from $50 to $100, and then to $150. What general conclusion can you reach about the effects of fixed costs on the firm’s output choice?The table below shows the firm’s revenue and cost information for Fixed Cost, FC of 50,100, and 150.With fixed costs of 100, the firm maximizes profit at 8 units of output. It also minimizeslosses with fixed costs of 150 at the same level. Fixed costs do not influence the optimalquantity, because they do not influence marginal cost.3. Suppose you are the manager of a watchmaking firm operating in a competitive market. Your cost of production is given by C = 100 + Q2, where Q is the level of output and C is total cost. (The marginal cost of production is 2Q. The fixed cost of production is $100.)a. If the price of watches is $60, how many watches should you produce to maximize profit?Profits are maximized where marginal cost is equal to marginal revenue. Here,marginal revenue is equal to $60; recall that price equals marginal revenue in acompetitive market:60 = 2Q, or Q = 30.b. What will the profit level be?Profit is equal to total revenue minus total cost:π = (60)(30) - (100 + 302) = $800.c. At what minimum price will the firm produce a positive output?A firm will produce in the short run if the revenues it receives are greater than its variablecosts. Remember that the firm’s short-run supply curve is its marginal cost curve abovethe minimum of average variable cost. Here, average variable cost is VCQQQQ ==2.Also, MC is equal to 2Q. So, MC is greater than AVC for any quantity greater than 0. This means that the firm produces in the short run as long as price is positive.4. Use the same information as in Exercise 1 to answer the following.a. Derive the firm’s short-run supply curve. (Hint: you may want to plot the appropriate costcurves.)The firm’s short-run supply curve is its marginal cost curve above average variable cost.The table below lists marginal cost, total cost, variable cost, fixed cost, and averagevariable cost.Q P TR TC MC TVC TFC AVC0 40 0 50 -50 ___ 0 50 ___1 40 40 100 -60 50 50 50 50.02 40 80 128 -48 28 78 50 39.03 40 120 148 -28 20 98 50 32.74 40 160 162 -2 14 112 50 28.05 40 200 180 20 18 130 50 26.06 40 240 200 40 20 150 50 25.07 40 280 222 58 22 172 50 24.68 40 320 260 60 38 210 50 26.3b. If 100 identical firms are in the market, what is the industry supply curve?For 100 firms with identical cost structures, the market supply curve is the horizontalsummation of each firm’s output at each price.Figure 8.4.b5. A sales tax of $1 per unit of output is placed on one firm whose product sells for $5 in a competitive industry.a. How will this tax affect the cost curves for the firm?With the imposition of a $1 tax on a single firm, all its cost curves shift up by $1.b. What will happen to the firm’s price, output, and profit in the short run?Since the firm is a price-taker in a competitive market, the imposition of the tax on onlyone firm does not change the market price. Since the firm’s short-run supply curve is itsmarginal cost curve above average variable cost and that marginal cost curve has shiftedup (inward), the firm supplies less to the market at every price. Profits are lower atevery quantity.c. What will happen in the long run?If the tax is placed on a single firm, that firm will go out of business.6. Suppose that a competitive firm’s marginal cost of producing output q is given byMC(q) = 3 + 2q. Assume that the market price of the firm’s product is $9:a. What level of output will the firm produce?To maximize profits, the firm should set marginal revenue equal to marginal cost. Giventhe fact that this firm is operating in a competitive market, the market price it faces isequal to marginal revenue. Thus, the firm should set the market price equal to marginalcost to maximize its profits:9 = 3 + 2q, or q = 3.Total revenue is price times quantity:TR = ($9)(3) = $27.Profit is total revenue minus total cost:= $27 - $21 = $6.Therefore, the firm is earning positive economic profits.8. A competitive industry is in long-run equilibrium. A sales tax is then placed on all firms in the industry. What do you expect to happen to the price of the product, the number of firms in the industry, and the output of each firm in the long run?With the imposition of a sales tax on all firms, the supply curve shifts up and a newequilibrium will result with a lower quantity and a higher price. This shift in supplyrepresents lower production for all firms.*9. A sales tax of 10 percent is placed on half the firms (the polluters) in a competitive industry. The revenue is paid to the remaining firms (the nonpolluters) as a 10 percent subsidy on the value of output sold.a. Assuming that all firms have identical constant long-run average costs before the sales tax-subsidy policy, what do you expect to happen to the price of the product, the output of each of the firms, and industry output, in the short run and the long run? (Hint: How does price relate to industry input?)The price of the product depends on the quantity produced by all firms in the industry.The immediate response to the sales-tax=subsidy policy is a reduction in quantity bypolluters and an increase in quantity by non-polluters. If a long-run competitiveequilibrium existed before the sales-tax=subsidy policy, price would have been equal tomarginal cost and long-run minimum average cost. For the polluters, the price after thesales tax is below long-run average cost; therefore, in the long run, they will exit theindustry. Furthermore, after the subsidy, the non-polluters earn economic profits thatwill encourage the entry of non-polluters. If this is a constant cost industry and the lossof the polluters’ output is compensated by an increase in the non-polluters’ output, theprice will remain constant.b. Can such a policy always be achieved with a balanced budget in which tax revenues are equal tosubsidy payments? Why? Explain.As the polluters exit and non-polluters enter the industry, revenues from pollutersdecrease and the subsidy to the non-polluters increases. This imbalance occurs whenthe first polluter leaves the industry and persist’s ever after.。

微观经济学Chapter91、Why does economic theory predict that the perfectly competitive firm will produce at the point where price equals marginal cost?A. Because this point maximizes profit for the firm.B. Because this point provides an efficient allocation of society's resources.C. Because this point results in zero economic profit.D. Because this point will minimize ATC for the firm.--------------------------------------------------------------------------------2、How does the long run differ from the short run in perfect competition?A. The long run is long enough to allow for the entry of new firms into the industry.B. In the long run, some firms will charge higher prices than others.C. In the short run, the firm seeks to maximize profit; it the long run it seeks to maximize revenue.D. In the short run, the firm seeks to maximize profit; it the long run it seeks to minimize cost.--------------------------------------------------------------------------------3、Luis operates a cherry orchard in Northern Oregon and sells the cherries in a perfectly competitive market at a price of $1.70 per pound. Last month Luis sold 2,000 pounds of cherries. His fixed cost of production was $800 and his average variable cost was $1.00 per pound. What was his profit?A. $600B. $800C. $3,400D. $2,600--------------------------------------------------------------------------------4、Nadia operates a frame shop and charges the perfectly competitive price of $65 for custom framing of a standard size picture. She is a price-taking producer. In order to maximize her profit, Nadia willA. accept framing orders up until the point where the marginal cost of doing so is $65.B. seek to operate at the minimum point on her marginal cost curve.C. seek to operate at the minimum point on her average variable cost curve.D. seek to produce at the point where her average variable cost is $65.--------------------------------------------------------------------------------5、In maximizing net gains, the perfectly competitive firm will seek toA. maximize profit.B. minimize average variable cost.C. minimize marginal cost.D. minimize average total cost.--------------------------------------------------------------------------------6、Which of the following is NOT a characteristic of a perfectly competitive industry?A. Each firm seeks to undercut the price of its competitors.B. There is easy entry and exit.C. Each firm is a price-taking producer.D. Each firm has a small share of the market.--------------------------------------------------------------------------------7、The quantity supplied by a perfectly competitive firm at a given market price is determined byA. the firm's marginal cost curve.B. the firm's average total cost curve.C. the number of firms in the market.D. the firm's marginal revenue curve.--------------------------------------------------------------------------------8、A perfectly competitive firm is currently selling its product at the market price of $6. Its average fixed cost is $0.75 and its average total cost is $5.50. How much would the market price have to decline in order for the firm to choose to shut down in the short run?A. The price would have to fall below $5.50.B. The price would have to fall below $4.75.C. The firm should shut down now, at the price of $6.00D. The price would have to fall below $0.75--------------------------------------------------------------------------------9、For the perfectly competitive firm, economic profit equalsA. (price - average variable cost) x quantity.B. (price-marginal cost) x quantity.C. total revenue - total fixed cost.D. (price - average total cost) x quantity.--------------------------------------------------------------------------------10、The short-run individual supply curve of the perfectly competitive firm isA. its average total cost curve.B. its marginal cost curve above average variable cost.C. the upward-sloping portion of its average variable cost curve.D. its marginal cost curve above average total cost.--------------------------------------------------------------------------------11、Suppose that firms in the perfectly competitive potato-growing industry are earning economic profits. According to economic theory, what is likely to happen?A. The existence of profits will lead to a drop in the demand for potatoes.B. More firms will enter the market, thereby decreasing the industry supply and raising the market priceC. The costs of the firms will increase, eventually eliminating the profit.D. More firms will enter the market, thereby increasing the industry supply and lowering the market price.--------------------------------------------------------------------------------12、A perfectly competitive firm is charging the market price of $18 to sell its product. The firm is producing and selling the profit-maximizing quantity of 50 units at this price. Its average total cost is $17 and its average variable cost is $15. Which of the following statements is then TRUE?A. This firm should shut down now.B. At this current level of production, the firm's marginal cost is $17.C. At this current level of production, the firm's marginal cost is $15.D. The firm is earning an economic profit of $50.--------------------------------------------------------------------------------13、How does the long-run industry supply curve compare to the short-run industry supply curve?A. The short-run curve is based on the assumption that firms can control the price they charge, whereas the long-run curve assumes that the market sets the price.B. The long-run curve is always steeper than the short-run curve.C. The long-run curve is based on the assumption that firms can control the price they charge, whereas the short-run curve assumes that the market sets the price.D. The long-run curve is always flatter than the short-run curve.--------------------------------------------------------------------------------14、The existence of profit in a perfectly competitive industry means thatA. each producer is charging a different price.B. consumers will switch to substitute goods.C. the current price exceeds marginal cost.D. new producers will seek to enter the industry.--------------------------------------------------------------------------------15、Suppose that the long-run industry supply in the production of synthetic fabrics is perfectly elastic. Which of the following statements then is TRUE?A. The existence of profit within the industry will not draw new firms into the market.B. The long-run industry supply for synthetics is upward-sloping.C. The marginal cost curve of each synthetic-producing firm is horizontal.D. The long-run industry supply for synthetics is horizontal.--------------------------------------------------------------------------------16、Which of the following is NOT a characteristic of the long-run equilibrium in perfect competition?A. Price equals ATC for each firm.B. Each firm is producing an efficient quantity.C. Each firm is producing at the minimum point on the MC curve..D. Each firm is earning zero economic profit.--------------------------------------------------------------------------------17、A firm will choose to shut down in the short run whenA. marginal cost begins to increase.B. price is below the minimum point of A VC.C. total revenue is not sufficient to cover total cost.D. price is above the minimum point of A VC but below the minimum point of ATC.--------------------------------------------------------------------------------18、A perfectly competitive firm earns an economic profit whenA. price is above average total cost.B. price is above average variable cost.C. total variable cost exceeds total revenue.D. total cost exceeds total revenue.--------------------------------------------------------------------------------19、Tara sells her organic carrots in a perfectly competitive market for a price that is just higher than her minimum average variable cost of production, but lower than her minimum average total cost of production. Which of the following statements is then TRUE?A. She is incurring a loss, because price is less than A TC.B. She is earning a profit, because price is above A VC.C. She can minimize her losses by shutting down her operations now.D. Although she is currently incurring a loss, she could restore profitability by advertising her carrots.--------------------------------------------------------------------------------20、Gabriel operates a tree-trimming business in Maine. He charges the perfectly competitive price of $47 per hour. The marginal cost of working the 36th hour each week is $42; the marginal cost of working the 37th hour is $44; of the 38th hour is $46; and of the 39th hour is $48. How many hours should he work each week?A. He should work 36 hours per week, because the marginal cost of working rises after this point.B. He should work 38 hours per week, because this is the workload that maximizes his net gain.C. He should work 39 hours per week, because he would have to lower his price if her wanted to work more than that.D. He should work 40 hours per week, because he can always earn more revenue by working more.。

Outline for Reviewing Microeconomics (2013)3. Short Answer（3×10，30 points）Chapter 2questions for review: 5, 65. Explain why for many goods, the long-run price elasticity of supply is larger than theshort-run elasticity.The price elasticity of supply is the percentage change in the quantity supplied divided by the percentage change in price. In the short run, an increase in price induces firms to produce more by using their facilities more hours per week, paying workers to work overtime and hiring new workers. Nevertheless, there is a limit to how much firms can produce because they face capacity constraints in the short run. In the long run, however, firms can expand capacity by building new plants and hiring new permanent workers. Also, new firms can enter the market and add their output to total supply. Therefore, the price elasticity of supply is larger in the long run than in the short run.6. Why do long-run elasticities of demand differ from short-run elasticities? Consider two goods: paper towels and televisions. Which is a durable good? Would you expect the price elasticity of demand for paper towels to be larger in the short run or in the long run? Why? What about the price elasticity of demand for televisions?Long-run and short-run elasticities differ based on how rapidly consumers respond toprice changes and how many substitutes are available. If the price of paper towels, anon-durable good, were to increase, consumers might react only minimally in the shortrun- because it takes time for people to change their consumption habits. In the longrun, however, consumers might learn to use other products such as sponges or kitchentowels instead of paper towels. In this case, then, the price elasticity would be larger inthe long run than in the short run. In contrast, the quantity demanded of durablegoods, such as televisions, might change dramatically in the short run following a pricechange. For example, the initial result of a price increase for televisions would causeconsumers to delay purchases because they could keep using their current TVs longer.Eventually consumers would replace their televisions as they wore out or becameobsolete. Therefore, we expect the demand for durables to be more elastic in the shortrun than in the long run.Chapter 3questions for review:1, 5；exercise: 21. What are the four basic assumptions about individual preferences? Explain the significance or meaning of each.(1) Preferences are complete: this means that the consumer is able to compare andrank all possible baskets of goods and services. (2) Preferences are transitive: thismeans that preferences are consistent, in that if bundle A is preferred to bundle Band bundle B is preferred to bundle C, then bundle A is preferred to bundle C. (3)More is preferred to less: this means that all goods are desirable, and that theconsumer always prefers to have more of a good. (4) Diminishing marginal rate ofsubstitution: this means that indifference curves are convex, and that the slope ofthe indifference curve increases (becomes less negative) as we move down along thecurve.As a consumer moves down along her indifference curve she is willing to give up fewer units of the good on the vertical axis in exchange for one more unit of the good on the horizontal axis.This assumption also means that balanced market baskets are generally preferred to baskets that have a lot of one good and very little of the other good.5. What happens to the marginal rate of substitution as you move along a convex indifference curve? A linear indifference curve?The MRS measures how much of a good you are willing to give up in exchange for one more unit of the other good, keeping utility constant. The MRS diminishes along a convex indifference curve. This occurs because as you move down along the indifference curve, you are willing to give up less and less of the good on the vertical axis in exchange for one more unit of the good on the horizontal axis. The MRS is also the negative of the slope of the indifference curve, which decreases (becomes closer to zero) as you move down along the indifference curve. The MRS is constant along a linear indifference curve because the slope does not change. The consumer is always willing to trade the same number of units of one good in exchange for the other.Chapter 4 questions for review:1, 3, 111. Explain the difference between each of the following terms:a. a price consumption curve and a demand curveThe difference between a price consumption curve (PCC) and a demand curve is that the PCC shows the quantities of two goods that a consumer will purchase as the price of one of the goods changes, while a demand curve shows the quantity of one good that a consumer will purchase as the price of that good changes. The graph of the PCC plots the quantity of one good on the horizontal axis and the quantity of the other good on the vertical axis. The demand curve plots the quantity of the good on the horizontal axis and its price on the vertical axis.b. an individual demand curve and a market demand curveAn individual demand curve plots the quantity demanded by one person at various prices. A market demand curve is the horizontal sum of all the individual demand curves for the product. It plots the total quantity demanded by all consumers at various prices.c. an Engel curve and a demand curveAn Engel curve shows the quantity of one good that will be purchased by a consumer at different income levels. The quantity of the good is plotted on the horizontal axis and the consumer’s income is on the vertic al axis. A demand curve is like an Engel curve except that it shows the quantity that will be purchased at different prices instead of different income levels.d. an income effect and a substitution effectBoth the substitution effect and income effect occur because of a change in the price of a good. The substitution effect is the change in the quantity demanded of the good due to the price change, holding the consumer’s utility constant. The income effect isthe change in the quantity demanded of the good due to the change in purchasingpower brought about by the change in the good’s price.3. Explain whether the following statements are true or false.a. The marginal rate of substitution diminishes as an individual movesdownward along the demand curve.True. The consumer maximizes his utility by choosing the bundle on his budget linewhere the price ratio is equal to the MRS. For goods 1 and 2, P1/P2 = MRS. As theprice of good 1 falls, the consumer moves downward along the demand curve for good1, and the price ratio (P1/P2) becomes smaller. Therefore, MRS must also becomesmaller, and thus MRS diminishes as an individual moves downward along thedemand curve.b. The level of utility increases as an individual moves downward along thedemand curve.True. As the price of a good falls, the budget line pivots outward, and the consumeris able to move to a higher indifference curve.c. Engel curves always slope upwards.False. If the good is inferior, then as income increases, quantity demandeddecreases, and therefore the Engel curve slopes downwards.11. Explain which of the following items in each pair is more price elastic.a. The demand for a specific brand of toothpaste and the demand for toothpaste in generalThe demand for a specific brand is more elastic because the consumer can easilyswitch to another brand if the price goes up.b. The demand for gasoline in the short run and the demand for gasoline in the longrunDemand in the long run is more elastic since consumers have more time to adjust toa change in price. For example, consumers can buy more fuel efficient vehicles, movecloser to work or school, organize car pools, etc.Chapter 6 questions for review:1, 5, 71. What is a production function? How does a long-run production function differ from a short-run production function?A production function represents how inputs are transformed into outputs by a firm.In particular, a production function describes the maximum output that a firm canproduce for each specified combination of inputs. In the short run, one or more factorsof production cannot be changed, so a short-run production function tells us themaximum output that can be produced with different amounts of the variable inputs,holding fixed inputs constant. In the long-run production function, all inputs arevariable.5. What is the difference between a production function and an isoquant?A production function describes the maximum output that can be achieved with anygiven combination of inputs. An isoquant identifies all of the different combinationsof inputs that can be used to produce one particular level of output.7. Isoquants can be convex, linear, or L-shaped. What does each of these shapes tell youabout the nature of the production function? What does each of these shapes tell you about the MRTS?Convex isoquants indicate that some units of one input can be substituted for a unitof the other input while maintaining output at the same level. In this case, theMRTS is diminishing as we move down along the isoquant. This tells us that it becomes more and more difficult to substitute one input for the other while keeping output unchanged. Linear isoquants imply that the slope, or the MRTS, is constant.This means that the same number of units of one input can always be exchanged fora unit of the other input holding output constant. The inputs are perfect substitutesin this case. L-shaped isoquants imply that the inputs are perfect complements, andthe firm is producing under a fixed proportions type of technology. In this case thefirm cannot give up one input in exchange for the other and still maintain the samelevel of output. For example, the firm may require exactly 4 units of capital for eachunit of labor, in which case one input cannot be substituted for the other.Chapter 7questions for review:3, 7, 143. Please explain whether the following statements are true or false.a. If the owner of a business pays himself no salary, then the accounting cost is zero, but the economic cost is positive.This is True. Since there is no monetary transaction, there is no accounting, or explicit, cost. However, since the owner of the business could be employed elsewhere, there is an economic cost. The economic cost is positive, and reflectsing the opportunity cost of the owner’s time. The economic cost is the value of the owner’stime in his next best alternative, or the amount that the owner would earn if he tookthe next best job.7. Assume that the marginal cost of production is increasing. Can you determine whether the average variable cost is increasing or decreasing? Explain.When marginal cost is increasing, average variable cost can be either increasing or decreasing as shown in the diagram below. Marginal cost begins increasing at output level q1, but AVC is decreasing. This happens because MC is below AVC and is therefore pulling AVC down. AVC is decreasing for all output levels between q1 and q2. At q2, MC cuts through the minimum point of AVC, and AVC begins to rise becauseMC is above it. Thus, for output levels greater than q2, AVC is increasing.17.14. What is the difference between economies of scale and returns to scale? Economies of scale depend on the relationship between what happens to cost andwhen outpuoutput i.e., how does cost change when output is doubled? t is doubled. Returns to scale depend on what happens to output when all inputs are doubled. The difference is that economies of scale reflect input proportions that change optimallyas output is increased, while returns to scale are based on fixed input proportions (such as two units of labor for every unit of capital) as output increases.Chapter 8questions for review:3, 4, 11Chapter 10 questions for review:2, 3, 5, 8Chapter 11questions for review:1, 3, 4Chapter 12 questions for review:2, 6, 8, 10 Chapter 14questions for review:2, 4, 5Chapter 16questions for review:4, 7, 13Chapter 17questions for review:6, 10；exercise: 3, 4 Chapter 18questions for review:1, 2, 3, 104. Caculation（2×10，20 points）Chapter 2exercise:11Chapter 3exercise:14, 16Chapter 4exercise:9, 13Chapter 6exercise:7, 8, 9Chapter 7exercise:3, 9, 11Chapter 8exercise:4, 5, 6, 7, 11 Chapter 10exercise:6, 7Chapter 11exercise:4, 5Chapter 12exercise:3(a/b/c/d), 4, 6(a/b/c) Chapter 14exercise:8, 10(a/b/c) Chapter 18exercise:3。

8Firms in Perfectly Competitive MarketsChapter SummaryIn a perfectly competitive market there are many buyers and many firms, all of whom are small relative to the total market. Products sold by these firms are identical and there are no barriers to new firms entering the market. Firms in a perfectly competitive market are unable to control the prices of goods they sell and are unable to earn economic profits in the long run.Prices in perfectly competitive markets are determined by the interaction of market demand and market supply. Since each firm must accept the market price, the firm is called a price taker. The objective of the firm is to maximise profit. Profit is the difference between total revenue and total cost. The firm will produce the output for which marginal revenue (MR) is equal to marginal cost (MC). (A characteristic of price taker firms is this: marginal revenue is the same as price. This is not true of other market structures.) In the short run the firm’s price: (a) will exceed its average total cost (ATC) which means it will make an economic profit, or (b) will equal ATC so its total cost will equal total revenue and it earns no economic profit, or (c) will be less than ATC, which means the firm experiences an economic loss. (Remember economic costs include all opportunity costs as well as explicit accounting costs.)A firm experiencing losses can continue to produce, it can stop production by shutting down temporarily, or it can go out of business. The third option is a long-run decision while the first two are short-run. In the short run, the firm can either produce the profit maximising level of output or produce zero output. If shutting down (Q = 0) would lose an amount greater than its fixed cost, the firm will shut down temporarily. If the firm can reduce its loss below the amount of its fixed cost it will continue to produce. The firm will produce output even though total profits remain negative if total revenue is greater than total variable cost. This is identical to saying that the price of its output (P) must exceed average variable cost (AVC). The condition P = AVC is called the shutdown condition. The minimum point on the firm’s average variable cost curve is called the shutdown point.When firms earn short-run profits, other firms will enter the industry. This shifts the industry supply curve to the right and lowers the market price. Entry continues until economic profits are zero. When firms suffer short-run losses, some firms will exit the industry. The exit of firms shifts the industry supply curve to the left and the market price increases. Exit continues until economic profits are zero.The long-run supply curve in a perfectly competitive market shows the relationship between market price and quantity supplied. In a long run competitive equilibrium entry and exit of firms causes the typical firm to earn zero economic profits.121 Chapter8Learning ObjectivesWhen you finish this chapter you should be able to:1.Define a perfectly competitive market, and explain why a perfect competitor faces a horizontaldemand curve. A perfectly competitive market has many buyers and sellers, all firms sell identical products and there are no barriers to new firms entering the market. A perfectly competitive firm faces a horizontal demand curve because if the firm tried to raise its price, consumers would buy from the firm’s competitors. Since the firm can sell all the output it wants at the current market price there would be no point to trying to charge a lower price. If a firm increases the output it sells, the price will not decrease because each firm is too small to shift the market supply curve enough to lower equilibrium price.2.Explain how a perfect competitor decides how much to produce. To make profit as large as possible, afirm will produce that quantity of output for which marginal revenue equals marginal cost. Since marginal revenue equals price for a perfectly competitive firm, price will also equal marginal cost at the profit-maximising quantity of output.e graphs to show a firm’s profit or loss. The firm’s profit-maximising rate of output is determined bythe intersection of the demand curve with the marginal cost curve. The position of the average total cost (ATC) curve in this graph will indicate whether the firm earns a profit (price exceeds ATC) or suffers a loss (price is less than ATC).4.Explain why firms may shut down temporarily. A firm experiencing losses in the short run will shutdown if the revenue from producing is insufficient to cover its total variable costs. By shutting down, the firm will avoid variable costs and minimise its losses.5.Explain how entry and exit ensure that perfectly competitive firms earn zero economic profit in thelong run. If firms earn short run economic profits, other firms will enter the market. The entry of firms will shift the market supply curve to the right and lower price until the short run profits are eliminated. If firms suffer short run losses, some firms will leave the market. The exit of firms will shift the market supply curve to the left and raise price until the short run losses are eliminated.6.Explain how perfect competition leads to economic efficiency. In the long run, competitive forces willdrive the market price to the minimum average total cost of the typical firm. This means that perfect competition results in productive efficiency. Firms also produce at the point where the marginal cost of producing another unit equals the marginal benefit consumers receive from consuming that unit. This means that perfect competition achieves allocative efficiency. This result only applies to perfectly competitive firms because only a horizontal demand curve can touch the long run ATC curve at its lowest point. Downward sloping demand curves will always be tangent to LRATC at a point above the minimum.Chapter ReviewChapter Opener: Perfect Competition in the Market for Organic FoodThe market for organic food has grown rapidly in Australia recently. In response to rising demand many farmers switched to organic methods (from 372,000 hectares in 1990 up to 7 million in 2007). At the moment, organic food, although it costs around 15% more to produce, attracts a price premium of around 50%. However, in response to this increase in demand for organic food, supply is expected to increase further, which will probably force these prices down again. Therefore this industry exhibits characteristics of perfect competition, whereby short run profits are eventually eroded in the long run due to the increase in other firms (farmers) entering the market.Firms in perfectly competitive markets 122Perfectly Competitive MarketsA perfectly competitive market is a market that meets the conditions of (1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market. Prices in perfectly competitive markets are determined by the intersection of market demand and supply. Consumers and firms must accept the market price if they want to buy and sell in a competitive market.A price taker is a buyer or seller that is unable to affect the market price. A firm in a perfectly competitive market is a price taker because it is very small relative to the market and sells exactly the same product as every other firm. Although the market demand curve has the normal downward shape, the demand curve for a perfectly competitive firm is horizontal at the market price.Helpful Study HintIn order to understand what a perfectly elastic demand curve is, draw a series of demand curvesthat are increasingly more elastic, but not perfectly so. With each of these curves the responseof quantity demanded to a given price change becomes greater and greater. The most elastic ofthese curves will have a slight downward slope. The perfectly competitive firm’s demand curvecan then be understood as representing what happens to quantity demanded for the smallestincrease in price — quantity demanded drops to zero even if the price, is increased by only acent! Since the firm can sell all it can at the market price the question “what happens toquantity if price is decreased?” is irrelevant. The firm would not choose to lower price.Consider a farmer offering to sell wheat at $2.95 per bushel if he can sell all he produced for aprice of $3.00.How a Firm Maximises Profit in a Perfectly Competitive MarketEconomists assume that the objective of a firm is to maximise profits. Profit is the difference between total revenue (TR) and total cost (TC). Therefore, a firm will produce that quantity of output where the difference between TR and TC is as large as possible. A firm’s average revenue (AR) equals total revenue divided by the number of units sold. Average revenue is the same as market price. For a firm in a perfectly competitive market, price is also equal to marginal revenue. Marginal revenue (MR) is the change in total revenue caused by producing and selling one more unit. The marginal revenue curve for a perfectly competitive firm is the same as its demand curve.The marginal cost (MC) of production for a perfectly competitive firm first falls, then rises. So long as MR exceeds MC the firm’s profits are increasing and production will increase. The firm’s profits will decrease if production is increased beyond the output for which MC exceeds MR. The profit maximising level of output is where MR = MC. Since P = MR for these firms, profit will be maximised when P = MC.123 Chapter8Helpful Study HintStudents often ask “Why wouldn’t the firm want to maximise the difference between MR andMC?” This question is addressed in the feature Don’t Let This Happen to You! [page 254]Read this feature and understand the firm’s goal is to maximise total profit not additionalprofit. Another frequently asked question is “Why would the firm produce a unit of output forwhich MR = MC since it would not earn any profit from this last unit?” Included in the cost ofproduction is a normal return so that the revenue earned from the profit maximising unit ofoutput is just enough to compensate the firm’s owner(s) for the effort made to produce it.Illustrating Profit or Loss on the Cost Curve GraphProfit equals total revenue (TR) minus total cost (TC). Since TR equals price multiplied by quantity sold, this can be written as:Profit = (P x Q) - TCDividing both sides by Q:Profit(PxQ)TC= -Q Q QThis equation means that profit per unit (or average profit) equals price minus average total cost. Multiplying both sides of the equation by Q yields an equation that tells us a firm’s total profit is equal to the quantity produced multiplied by the difference between price and average total cost. (P – ATC is called the profit margin per unit.) Profit = (P − ATC) x QThe graph illustrating the perfectly competitive firm’s demand curve, marginal revenue and average total cost curves [Figure 8.4, page 251] can be used to identify rectangles with areas equal to TR, TC and profit. The firm will make a profit if P > ATC. The firm will break even if P = ATC. The firm will experience losses if P < ATC.Helpful Study HintStudy Solved Problem 8.1 (page 252) carefully. Be sure you understand the graphs that show afirm’s profit or loss. If properly drawn, graphs can help you to answer questions that would bemore difficult to answer using only words or numbers. Aids to learning from the graphs: (1)When a firm’s demand curve intersects the ATC curve, price will exceed ATC for some levelof output. That means the firm earns a profit. (2) To show a firm suffering losses the ATCcurve is drawn everywhere above the demand curve. (3) Always draw the demand curve andthe MC curve first to determine the profit-maximising output. This will make it easier toidentify ATC and AVC at this same output.Firms in perfectly competitive markets 124Deciding Whether to Produce or to Shut Down in the Short RunIn the short run, a firm suffering losses has two choices. The first choice is whether to produce any output at all. The firm will produce the profit-maximising output and reduce its loss below the amount of its fixed cost if, by continuing to produce, its total revenue is greater than its total variable cost. The firm’s second choice is to stop production by shutting down temporarily (producing zero output). During a temporary shut down a firm must still pay its fixed costs. If, by producing, the firm would lose an amount greater than its fixed costs, it will shut down.A sunk cost is a cost that has already been paid and cannot be recovered. The firm should treat its sunk costs as irrelevant to its decision making.The firm’s marginal cost curve is its supply curve only for prices at or above average variable cost. The shutdown point is the minimum point on a firm’s average variable cost curve. If the price falls below this point, the firm shuts down production in the short run. The market supply curve can be derived by adding up the quantity that each firm in the market is willing to supply at each price.Helpful Study HintThe decision to shut down is not the same as deciding to leave the market or go out of business.Many firms sell goods or services only in certain seasons. Examples include ski resorts, retailstores near summer resorts and Christmas tree vendors. These firms shut down temporarilyduring the off season. Going out of business permanently, however, is a long-run decision.“If Everyone Can Do It, You Can’t Make Money at It” – The Entry and Exit of Firms in the Long RunIn the long run, unless a firm can cover all of its costs it will shut down and exit the industry. Economic profit is a firm’s revenues minus all its costs, implicit and explicit. Economic loss means a firm’s total revenue is less than its total cost, including all implicit costs. If firms in a perfectly competitive market are earning economic profits in the short run, firms in other markets that are breaking even or suffering losses will have an incentive to enter the market so they too can earn an economic profit. Entrepreneurs will start new firms as well.The entry of new firms shifts the industry supply curve to the right. As a result, the market price will fall. The entry of firms will continue until price is equal to average total cost. If firms in a perfectly competitive market are suffering losses in the short run, some of these firms will exit the industry since they will not be able to cover all of their costs. The exit of firms shifts the industry supply curve to the left. As a result, the market price will rise. The exit of firms will continue until price is equal to average total cost.Long-run competitive equilibrium is the situation in which the entry and exit of firms have resulted in the typical firm just earning zero economic profits. The long-run supply curve shows the relationship in the long run between market price and the quantity supplied in the long run. A constant cost industry is an industry in which the typical firm’s average total costs do not change as the industry expands. This means that the firm will have a horizontal long-run supply curve. An increasing cost industry is an industry in which the typical firm’s long run average total cost increases as the industry expands. This means the firm will have an upward sloping long run supply curve. A decreasing cost industry is an industry in which the typical firm’s average total costs decrease as the industry expands. This means that the firm will have a downward sloping long run supply curve.125 Chapter8Helpful Study HintWhich firms are most likely to leave an industry that is experiencing economic losses? Eventhough we assume all firms are identical, that is not true in the real world. Some firms havemore financial resources and are better able to withstand short periods of negative profits.Financially weaker firms are more likely to exit.Perfect Competition and EfficiencyProductive efficiency is the situation in which a good or service is produced at the lowest possible average cost. Perfect competition can lead to productive efficiency. Managers of firms strive to earn economic profits by reducing costs. (In perfectly competitive markets, this is the only choice they have.) But other firms quickly copy ways of reducing costs so that in the long run consumers, not producers, benefit from cost reductions.Allocative efficiency is a state of the economy in which production reflects consumer preferences. In particular, every good or service is produced up to the point where the last unit produced provides a marginal benefit to consumers equal to the marginal cost of producing it. Entrepreneurs in a perfectly competitive market efficiently allocate resources to best satisfy consumer wants.Helpful Study HintCritics of the perfectly competitive model complain that few industries feature buyers andsellers of identical products who are all price takers. These critics fail to understand either whatan economic model is or how these models are used by economists. Although not manymarkets are perfectly competitive, many markets are very competitive and experience entry andexit in response to short-run profits and losses. The markets for televisions, calculators,personal computers and even automobiles have changed over time as firms earned short-runprofits or new technologies forced firms to adapt. The steel and coal industries experienced exitby firms in response to short-run losses, much as the allegedly “unrealistic” model of perfectcompetition predicts. The model also provides policy makers and analysts with a valuablestandard against which to judge the efficiency of real markets. When the price of a product isgreater or less than marginal cost, one can argue that too little or too much of the product hasbeen produced, a deviation from allocative efficiency. Solved Problem 8.2 (page 266) describesthe benefits of competition in markets for such products as cell phones and DVD players.Solved ProblemChapter 8 in the textbook includes two Solved Problems to support learning objectives 3 (“Use graphs to show a firm’s profit or loss”) and 6 (“Explain how perfect competition leads to economic efficiency”). The following Solved Problem supports another of this chapter’s learning objectives.Solved Problem 11-3 Supports learning objective 2: Explain how a perfect competitor decides how much to produce.Firms in perfectly competitive markets 126 Cost and Revenue for “Apples R’ Us”Sally Borts owns “Apples R’ Us,” an orchard located in Washington State in the US. Sally is one of about 7,500 apple producers in the United States who produced over 9 billions pounds of apples in 2004. Although the price of apples reached nearly $.30 per pound in 2003, it fell to less than $.20 in 2005. Sally believes she would be able to sell her apples for $.20 in 2006, or $200 per thousand lbs. She estimated her revenue and costs of production for various quantities of apples based on the number of pounds her orchard would yield per acre.Output (000 lbs.) Total cost(000)Marginalcost (000)Total revenue(000)Marginal revenue(price per 000 lbs)0 $50 $01 150 $100 200 $2002 225 75 400 2003 275 50 600 2004 375 100 800 2005 525 150 1,000 2006 725 200 1,200 2007 1,000 275 1,400 2008 1,500 500 1,600 200Sources: /media/industry/index.shtml. Agricultural Prices, U.S. Department of Agriculture, National Agricultural Statistics Service.(a)Determine whether “Apples R’ Us” is a perfectly competitive firm.(b)Explain how Sally will decide how much to produce.Solving the Problem:Step 1: Review the chapter material. Since this problem requires an understanding of the lessons from “How a Firm Maximises Profit in a Perfectly Competitive Market,” you may want to review this section of Chapter 8 beginning on page 246.Step 2: Determine if “Apples R’ Us” is a perfectly competitive firm. Sally is one of thousands of apple producers and her output is a small fraction of the total number of apples produced. Within each variety of apples (Red Delicious, McIntosh, Granny Smith, etc.) apple growers sell an identical product and new firms are free to enter the market. Therefore, “Apples R’ Us” is a perfectly competitive firm. Also, marginal revenue is constant, meaning the demand curve must be horizontal. That is only true in a perfectly competitive market.Step 3: Explain how Sally will decide how much to produce. Sally should increase her production of apples so long as the marginal revenue exceeds her marginal cost of production. Sally’s marginal revenue equals the $200 price of a thousand pounds of apples. Therefore, if the estimates for 2006 are accurate, Sally should produce 6 thousand pounds of apples since her marginal cost for this quantity of output also equals $200.8127 ChapterSelf-Test(Answers are provided at the end of the Self-Test.)Multiple-Choice Questions1Which of the following are characteristics of a perfectly competitive industry?a Firms are unable to control the prices of the products they sell.b Firms are unable to earn an economic profit in the long run.c Firms sell identical products.d All of the above.2 A buyer or seller that is unable to affect the market price is called?a A price maker.b A price taker.c An independent producer.d A monopoly.3To maximise profit, which of the following should a firm attempt to do?a Maximise revenue.b Minimise cost.c Find the largest difference between total revenue and total cost.d All of the above simultaneously.4What is the relationship between price, average revenue, and marginal revenue for a firm in a perfectly competitive market?a Price is equal to average revenue and greater than marginal revenue.b Price is greater than average revenue and equal to marginal revenue.c Price is equal to both average revenue and marginal revenue.d Price, average revenue, and marginal revenue are usually all different values.5Refer to the figure below. Based on the information on the graph, what can be said about marginal revenue?Firms in perfectly competitive markets 128a Marginal revenue increases as the quantity of bushels produced and sold increases.b Marginal revenue decreases with additional bushels produced and sold.c Marginal revenue remains constant as additional bushels are produced and sold.d There is insufficient information to deduct the behaviour of marginal revenue from this graph.6Refer to the figure below. Which of the following best represents profit per unit?a The shaded rectangle.b The distance between points A and B.c Market price, or the demand (marginal revenue) curve.d None of the above.7Refer to the figure below. One of the curves in this figure is not necessary in order to determine the amount of profit obtained from producing any level of output. Which curve can be discarded?a The marginal cost curve.b The demand curve.c The average total cost curve.d None of the above. All three curves are needed in order to determine the amount of profit obtained fromproducing and selling any amount of output.8129 Chapter8Refer to the figure below. What happens at point A?a The firm earns zero accounting profit.b The firm suffers a loss.c The firm breaks even, which means that it earns some profit.d The firm may or may not earn profit.9Refer to the figure below. Which level of the demand curve results in economic losses?a Demand when price is $495.b Demand when price is $250.c Any demand curve for prices above $495.d Both levels of the demand curve shown on the graph result in losses for the firm.10Refer to the figure below. Which demand curve is associated with the shutdown point?a Demand1b Demand2c Demand3d Demand411Refer to the figure below. What is the value of total fixed cost?a$3,400b$5,800c$2,400d None of the above. There is insufficient information to answer the question.12Which term below best describes the minimum amount that a farmer needs to earn on her $100,000 investment in her farm to remain in the (perfectly competitive) industry in the long run?a Explicit cost.b Opportunity cost.c Economic profit.d Economic loss.13Refer to the graph below. What do you expect to happen in this market as it approaches long run equilibrium?a Profits and entry.b Losses and exit.c Profits and exit.d Losses and entry.14Refer to the figure below. After the shift in market demand, how will the firm react?a The firm will adjust its output upward in search of higher profit.b The firm will have to adjust its output downward and suffer losses.c The firm will maintain output constant but suffer losses.d The firm will adjust its output downward and earn higher profit.15What is long-run competitive equilibrium?a The situation in which the entry and exit of firms have resulted in the typical firm just breaking even.b A situation in which market price is at a level equal to the minimum point on the typical firm’s marginalcost curve.c The end of a process during which firms are prevented from adjusting their production methods.d All of the above.16Refer to the figure below. After the rightward shift in market demand, which of the following moves would happen next in this perfectly competitive market?a A reversal or leftward shift in market demand.b A rightward shift in market supply.c A leftward shift in market supply.d A further rightward shift in market demand.17Refer to the figure below. Initially, the market is in long-run equilibrium at point A. Immediately after the decrease in demand, in a constant-cost industry, which point is likely to be a temporary equilibrium and which point is a final equilibrium?a Point B is a temporary equilibrium and point C is a final equilibrium.b Point D is a temporary equilibrium and point C is a final equilibrium.c Point C is a temporary equilibrium and point D is a final equilibrium.d Point C is a temporary equilibrium and point A is a final equilibrium again.18Refer to the figure below. Which graph best depicts an industry in which the typical firm’s average costs decrease as the industry expands production?a The graph on the left.b The graph on the right.c Either graph could be associated with that industry.d Neither graph.19Which of the following terms best describes a state of the economy in which production reflects consumer preferences?a Allocative efficiency.b Productive efficiency.c Capitalism.d Consumer equilibrium.20Refer to the figure below. The graph describes a typical firm in the competitive DVD player industry. What combination of price and output levels best describes the existence of productive efficiency in the DVD player industry?a Point A.b Point B.c Both points reflect productive efficiency.d Neither point reflects productive efficiency.Short Answer Questions1.Entry and exit ensure that perfectly competitive firms will not earn economic profits in the long run. Whywould any firm remain in an industry if it cannot earn a profit?2.Explain why the firm’s short-run supply is that portion of its marginal cost curve that lies above averagevariable cost.3.Why must perfectly competitive firms produce at the lowest point of their average total cost curves whentheir markets are in long run equilibrium?4.When firms incur short run losses, the exit of some firms will shift the market supply curve to the left. Butsome firms will remain in the industry. Which types of firms will leave the market?5.Explain why a perfectly competitive firm would not advertise its product in order to attract consumersaway from rival firms.。

Lecture 22: Monopoly Behavior. 2007 Jeffrey A Mir on Outline1. Quantity and Quality Discounts2. Group Discounts3. Bundling4. Two-Part Tariffs1 IntroductionWe have so far studied two key components of the theory of the firm: pure competition and pure monopoly. These two extremes are important and interesting because they provide theoretical benchmarks and key insights;In general, however, we think of markets as being “in between”these two extremes in various ways. One way that real markets differ from these idealized theoretical markets is that the degree of market power is in between these extremes. Virtually every firm has some degree of market power–it can raise its price without losing all its customers–and virtually every firm faces some degree of competition from other firms.In particular, once one departs from the assumptions of perfect competition, where all firms make identical products, a host of other decisions becomes available to firms: what combination of quality and quantity to produce; how much to advertise; whether to bundle differentproducts together as one purchase; whether to offer different prices for different size purchases or to different groups, and so on.2 Quantity and Quality DiscountsOne interesting aspect of firm pricing decisions is variation in the price per unit of quantity or quality. This is one example of what is known as second-degree price discrimination. It is often referred to as non-linear pricing since the price per unit purchased is not constant, but depends on how much a given customer buys. In particular, a given customer can pay different amounts per unit depending on how much is purchased at one time. As a simple example, consider different sized bottles of ketchup. The price per ounce of ketchup differs substantially between large bottles and small bottles. Some of this difference could reflect differences in the costs of the bottles, or in handling costs related to the different sizes. But the differences are too large to be due mainly to difference in costs, and for simplicity, we ignore the possibility of cost differences here. Assume there are two different kinds of consumers, with demand curves given as follows:Graph: Demand Curves for High and Low WTP ConsumersOne kind of consumer has a high WTP, while the other has a low WTP. Ideally, the monopolist would like to identify which kind of consumer is which, keep the two kinds of consumers separate, and set different prices for the two groups. This means the monopolist would have to be able to prevent re-sale. If the monopolist cannot engage in perfect price discrimination but can separate consumers, the outcome might look like this (MC has been set to zero for ease of presentation): Graph: Monopoly Pricing with Two Identifiable Groups of ConsumersIf the monopolist can perfectly price discriminate in each sub-market, then the outcome might look like this instead:Graph: Perfect Price Discrimination with Two Identifiable Groups of ConsumersIn this case, the monopolist extracts all the surplus and also produces the efficient outcome: MC is zero, and the monopolist sells to each kind of consumer up to the point where all consumers with positive W T P for the good have purchased. In many instances, however, a monopolist can often not tell which kind of consumer is which. It can therefore not separate the consumers into two groups and set a different price for each, so, a fortiori, it cannot perfectly price discriminate.It is possible, however, to solve this dilemma. The approach consists of the monopolist offering the good in two different quantities at twodifferent prices, and then letting consumers select which (quantity, price) combination to purchase. This does not exactly replicate the solution where the monopolist can tell which kind of consumer is which, but it goes a long way in that direction. The key insight is that different kinds of consumers self-select into purchasing the appropriate package. Consider the following figure:Graph: Overlaid Demand Curves for Two Kinds of Consumersy=8 –x y=5 –xThe critical assumption is that the monopolist is now going to offer only predetermined amounts of the good. To understand exactly what is being assumed, imagine that a store sold ketchup the way gasoline stations sell gas: it has a “ketchup” pump ,and the consumer can buy oneounce, two ounces, three ounces, and so on.That is, the monopolist posts a price per unit, and the consumers decide exactly how many units to buy. In fact, ketchup and many other products are not offered this way. When you go to a grocery store, you must choose between a small-sized bottle and a large-sized Bottle .Even if you would like to buy only a tiny amount at the price per ounce of a small bottle, you have to buy the small bottle anyway. This situation occurs widely.Given this type of strategy, he monopolist has several possible choices.Pricing Strategy 1: The monopolist could offer to sell the quantity x1 at price A. That is, it only sells amounts that are “pre-packaged” to have x1 units of the good. Then type 1 consumers buy x1 and get zero surplus, while type 2 consumers buy x1 and get B as surplus. The monopolist gets 2A in profits.Graph; Pricing Strategy 1y=8 x ，y=5 xPricing Strategy 2: The monopolist could offer to sell the quantity x1 at price A, and the quantity x2 at price A+B+C. That is, it sells the good only in the amounts x1 and x2, at two different prices. As an example, think of large and small bottles of ketchup, or large and small ice cream cones. Graph: Pricing Strategy 2The problem with this strategy is that the type 2 consumers will not want to purchase the quantity x2 at price A+B+C.A type 2 consumer who made that purchase would receive zero surplus, whereas buying the quantity x1 yields surplus B. So, both types of consumers would purchase the quantity x1, and the monopolist would still get a profit of only 2A. Pricing Strategy 3: The monopolist could instead offer to sell the quantity x1 at price A, and the quantity x2 at price A+C. Type 1 consumers would continue to purchase x1.But now, type 2 consumers would be willing to purchase x2 units because that provides a surplus of B.(The surplus is the same as buying x1 units, so presumably the monopolist makes the price just a tad less than A+C.)The monopolist prefers this strategy to strategy 2 because the monopolist’s pro fit increases to 2A+C.Graph: Pricing Strategy 3Pricing Strategy 4: The monopolist can in fact do even better than strategy 3.Imagine lowering the price to type 1consumers just a bit, by the triangle labeled D. Type 1 consumers will then buy the amount x0 at price A and get zero surplus. The monopolist gets the amount A; so it receives a bit less profit from the type 1consumers. But type 2 consumers are now willing to pay A0+C+D+E0 for x2 units. This still gives a strictly positive surplus of B0.The monopolist’s pro…t increases by the amount of the trapezoid D+E.Graph: Pricing Strategy 4Continuing in this way, the monopolist will end up offering a quantity X m at price A m, and the quantity xx at price A m+ C m+ D m+ E m. One can write all this out algebraically and solve for the optimum values of each of these pieces. A different interpretation of this model is that the monopolist offers two different qualities of the good.An interesting question is whether this kind of price discrimination increases or decreases consumer plus producer surplus. In particular, what would happen if the monopolist were forced to offer only one price? The short answer is, “it depends.”One possibility is that the monopolist offers a price above the level that the low demand consumers are willing to pay, so this group is priced out of the market.3 Different Prices for Different Groups (Third-Degree PriceDiscrimination)Still another kind of price discrimination occurs when the potential customers for a given product fall into two or more readily identifiable groups, and the monopolist can easily set a different price for each of the different groupsThe different groups might correspond to different aged customers (senior citizen discounts at movie theaters; student discounts at museums); customers living in different geographic areas residents of different countries who pay different prices for prescription drugs); customers of different gender (ladies night at baseball games); and so on.To see how this works, assume two distinct groups. The monopolist can set a different price for the two groups and faces no risk of re-sale from one group to the other(this assumption applies better in some settings than others; for example, prescription drugs sold at low prices in Canada are routinely re-exported to the United States).The inverse demand functions of the two groups are:p1(y) p2(y) and monopolist’s cost function is c (y1+y2)The monopolist’s problem is thereforeMax y1; y2p1 (y1)y1+p2(y2)y2 c(y1+y2)with FOC isThat is, the MC of producing an extra unit must be the same as the MR in each market. The monopolist accomplishes this by offering different amounts for sale in the two markets. To get more intuition about how this works, it is useful to re-write these conditions in terms of elasticities. Applying our earlier formulas, we getThus, if demand is less elastic in market 1 than in market 2(1>2),then it turns out that p1>p2.The market in which demand is(relatively)inelastic is the market with the higher price.4 BundlingA still different kind of price discrimination can occur when firms sell goods in bundles. Standard examples include software suites; hardware sold with software loaded; sets of golf clubs; vacation packages consisting of air fare, car, and hotel; and so on.One possible reason for bundling is costs; in some instances, it is cheaper to sell the two different goods jointly. Relatedly, in some instances, two goods are highly complementary; for example, a spell-checker and a word-processor. In fact, bundling is far and away the norm. Think about a computer; it bundles memory chips, cables, diskdrives, and so on. One can, in fact, buy all these things separately and assemble one’s own computer.Or think about ice cream; it is just a particular bundling of cream, sugar, chocolate (no raisins), and so on. Viewed in this way, everything is a “bundled” good to some degree .Cost considerations (and comparative advantage)unquestionably play a key role in determining which bundles are provided in the market place. Dell has a big comparative advantage over most of us in assembling computer parts to make a computer. But bundling can also be the profit-maximizing response to certain kinds of consumer preferences. To see this, consider the following table:WP SpreadsheetType A 120 100Type B 100 120The table shows the W T P of type A and type B consumers for a word processing program and a spreadsheet program. We assume that the MC of producing either kind of program is zero and that the W T P for a bundle is exactly the sum of the two W T P s.The question is how a monopolist selling these two programs should market them.Strategy 1: The monopolist could simply sell each item separately. The profit maximizing price is$100 for each of the two programs. The monopolist sells one unit of each kind of software to each type ofconsumer and earns a profit of$400.Strategy 2: The monopolist could instead sell the two programs bundled for a price of$220.Type A and type B consumers will each buy one bundle. The monopolist makes a profit of$440.The key is that when a monopolist sells to different people, and it sells to everyone at the same price, the price is determined by the lowest W T P. The greater the dispersion in W T P, the lower the maximum price the monopolist can charge will be.By bundling, the monopolist, in effect, reduces the dispersion in W T P.5 Two-Part TariffsAnother common kind of price discrimination is two-part tariffs. This means a pricing structure in which customers pay a fixed fee to get access to the good in question and then a marginal fee per unit of the good actually purchased.The classic illustration is amusement parks (Disneyland).A consumer pays a fixed amount (e.g.,$100)to enter the park, and then a marginal fee(in the case of Disneyland,$0)per ride.In other applications, the marginal fee is not necessarily zero, but it is small compared to the entry fee. For example, the initiation fee at a country club might be$100,000, while the cost per round of golf is only$20.Other examples of two-part tariffs include razors and razor blades; cameras and film; and so on.We can model this as follows.Graph: Two Part TariffsThis portrays an individual consumer’s demand.The monopolist could set a price above p, but this would not extract all the surplus from this consumer.So, instead, the monopolist can charge a fixed fee equal to the value of area A, and then set a marginal fee equal to marginal cost.In this manner, the monopolist extracts all the surplus (and also provides the efficient quantity of rides).6 SummaryThis has been a quick overview of the most common forms of price discrimination and related monopoly behavior. The examples show first that a variety of common business practices make sense as ways that monopoly sellers can enhance their profit.。

微观经济学试题及答案英文版Microeconomics Exam Questions and Answers (English Version)Question 1:Define the law of demand and explain how it relates to the concept of elasticity.Answer 1:The law of demand states that, all else being equal, the quantity demanded of a good or service will decrease as its price increases, and vice versa. Elasticity, specifically price elasticity of demand, measures the responsiveness of the quantity demanded to a change in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. If the absolute value of the elasticity coefficient is greater than one, the demand is elastic; if it is less than one, the demand is inelastic; and if it equals one, the demand is unit elastic.Question 2:Explain the concept of marginal utility and how it relates to consumer behavior.Answer 2:Marginal utility is the additional satisfaction or utility derived from consuming one more unit of a good or service. It is the first derivative of the total utility function with respect to the quantity consumed. As consumers consume moreof a good, the marginal utility typically decreases, a phenomenon known as the law of diminishing marginal utility. This concept is fundamental to understanding consumer behavior and the decision-making process when allocating a limited budget among various goods and services.Question 3:What is the difference between a perfectly competitive market and a monopoly?Answer 3:A perfectly competitive market is characterized by a large number of buyers and sellers, homogeneous products, free entry and exit, and the absence of barriers to entry. Prices are determined by the market and individual firms are price takers. In contrast, a monopoly is a market structure where there is only one seller of a unique product with no close substitutes. The monopolist has market power and can set prices above marginal cost, leading to deadweight loss and inefficiency.Question 4:Explain the concept of opportunity cost and give an example.Answer 4:Opportunity cost is the value of the next best alternative that is forgone when making a choice. It represents the benefits an individual, investor, or business misses out on when choosing one alternative over another. For example, if a farmer has a choice between growing wheat or corn on a piece of land, the opportunity cost of choosing to grow wheat isthe profit that could have been earned from growing corn.Question 5:What are the factors that determine the shape of a firm's supply curve?Answer 5:The shape of a firm's supply curve is determined by the relationship between the cost of production and the quantity supplied. If the marginal cost of production is constant, the supply curve will be perfectly elastic (horizontal). If the marginal cost increases as production increases, the supply curve will be upward sloping. Factors such as technology, input costs, and the availability of resources can influence the shape of the supply curve.End of ExamPlease note that this is a sample exam and the questions and answers provided are for illustrative purposes only.。

微观经济名词解释CHAPTER 1 BriefingScarcity : the limited nature of society's resources。

Economics ： the study of how society manages its scarce resources.Efficiency ： the property of society getting the most it can from its scarce resources.Equity ： the property of distributing economic prosperity fairly among the members of society.Opportunity cost : whatever must be given up to obtain some item。

Rational : systematically and purposefully doing the best you can to achieve your objectives。

Marginal changes : small incremental adjustments to a plan of action。

Incentive ： something that induces a person to act。

Market economy : an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services。

Property rights ： the ability of an individual to own and exercise control over scarce resources。

垄断微观经济学名词解释垄断是指市场上只有一个或少数几家企业生产和销售某种产品或服务，这些企业面对的是相对缺乏竞争的市场环境。

在垄断市场中，企业通常能够控制价格和供应量，因此具有较大的市场力量。

垄断微观经济学是研究垄断市场行为和效果的分支学科，它揭示了垄断对资源配置、经济效率和社会福利的影响。

以下是对垄断微观经济学中常见名词的解释。

1. 垄断市场（Monopoly Market）垄断市场是指只有一个企业作为市场上唯一的供应者，没有其他企业可以直接进入该市场进行竞争。

企业能够通过控制价格和限制供应量来实施市场操纵，以追求更高的利润。

2. 垄断定价（Monopoly Pricing）垄断定价是指垄断企业根据市场需求和成本条件来确定产品或服务的价格。

垄断企业通常选择高于边际成本的价格，以获取最大利润。

垄断定价往往导致消费者支付较高的价格，并减少消费者剩余。

3. 自然垄断（Natural Monopoly）自然垄断是指某些行业或市场由于规模经济的存在而只能容纳一个企业。

在自然垄断下，一个企业能够以较低的成本生产并满足整个市场的需求，其他企业难以进入并与其竞争。

4. 垄断权（Monopoly Power）垄断权是指垄断企业在市场上掌握的能够影响价格和供应量的市场力量。

具有垄断权的企业能够通过调整价格和供应量来最大化利润，并在一定程度上控制市场。

5. 垄断利润（Monopoly Profit）垄断利润是指垄断企业由于在市场上独占地位而获得的超额利润。

由于缺乏竞争，垄断企业能够以较高的价格销售产品或服务，从而实现利润最大化。

6. 垄断入门壁垒（Monopoly Entry Barrier）垄断入门壁垒是指阻止其他企业进入垄断市场并与垄断企业竞争的因素。

壁垒可以是经济性的，如高度专业化的技术、成本优势和规模经济；也可以是法律或政府规定的，如专利权和专有权。

7. 垄断失灵（Monopoly Failure）垄断失灵指垄断市场下企业的行为和结果与社会经济利益相悖。

Syllabus for MicroeconomicsThe Nature of the Course：Specialized required courseSuitable Specialty: International economy and trade Marketing AccountingInformation Management and Systems Business AdministrationFinancial AdministrationCredit： 4Class Hours：64Authors：yijun liu ling langT he Purpose and Tasks of the CourseThis course is a basic professional course for undergraduate in the School of Business and Management. Through this course, students have a more comprehensive understanding of basic issues and basic viewpoints on the microeconomics. They can grasp the basic concepts of microeconomics, the basic idea, the basic analytical methods and basic theory as well. More important, lay ing a theoretical foundation for the further study of other professional courses.The Basic Requirements of the Course1．Require students to grasp the basic concept, the basic thought, the basic analysis method and the elementary theory of microeconomics.2．Require students to conduct self-study, and students are encouraged to widely read reference books to make it more understanding of basic economic theory and its application in all respects.3．Require teachers to pay close attention to using graphic tools and using mathematical tools properly.4．The advance curriculum is the higher mathematics.Outline the Content and Hours Allocation Recommendations Chapter 1Introduction 6 Class Hours §1 Ten Principles of Economics1.How People Make Decisions2. How People Interact3.How the Economy as a Whole Works§2 Thinking Like an Economist1.The Economist as a Scientist2. The Economist as a Policy Adviser3.Why Economist Disagree§3 the Using of Graphs in Economics （#）1.Graphic Drawing and Graphics Type in Economic Analysis2.Slope and Elasticity3. Note for Graphics Use in Economic Analysis§4 Interdependence and the Gains from Trade1.The Production Possibilities Frontier、Specialization and Tradeparative Advantage3.Applications of Comparative AdvantageChapter 2Supply and Demand（Ⅰ）：How Markets Work 8 Class Hours §1Markets and Competitionpetitive Market2.Other Markets§2 law of demand1.Demand and the Demand Curve2.Shifts in the Demand Curve and Shift of the Demand Curve3.Market Demand and Individual Demand§3 law of supply （#）1. Supply and the Supply Curve2. Shifts in the Supply Curve and Shift of the Supply Curve3.Market Supply and Individual Supply§4 Supply and Demand Model1.The Conditions of Supply and Demand Model2.Supply and Demand Model3.What happens to equilibrium when supply and demand shifts?4.Cobweb Theory （☆）§5Elasticity and The Applications of Elasticity Theory1.the Elasticity of Demand and Its Application2.the Elasticity of Supply and Its Application（#）§6Supply、Demand and Government Policies1.Controls on prices （#）2.How Taxes Affect Market Outcomes3.Can Good News for Farming Be Bad News for Farmers?Exercise classes 2Class Hours Chapter 3 Supply and Demand（Ⅱ）：Market and Welfare 16 Class Hours §1 The Theory of Consumer Choice 4 Class Hours1.Cardinal Utility Theory2. Preference Theory3.Application of The Theory of Consumer Choice§2 The Theory of Producer Choice 6 Class Hours1.The Organization of Production （#）2. Production Function and Factor Inputs3. The Cost Theory§3 Consumer Surplus 2Class Hours1.Willingness to Paying the Demand Curve to Measure Consumer Surplus3.How a Lower Price Raises Consumer Surplus§4 Producer Surplus（#）1.Cost and the Willingness to Sell2. Using the Supply Curve to Measure Producer Surplus3. How a Higher Price Raises Producer Surplus§5 Market Efficiency 2 Class Hours1.The Concept of Efficiency2.The Equilibrium Efficiency of the Competitive Firm(1)3.The conditions of the Efficient Competitive Firm§6 Application：The Cost of Taxation 2 Class Hours1.The Deadweight Loss of Taxation2.The Determinants of the Deadweight Loss3. Deadweight Loss and Tax Revenue as Taxes Vary§7 Application：International Trade （#）1.The Determinants of Trade2.The Winners and Losers from Trade3.The Arguments for Restricting TradeExercise classes 3 Class Hours Discussion class 1 Class Hour Chapter 4The Economics of the Public Sector 4 Class Hours §1 Externalities1.Externalities and Market Inefficiency2.Private Solutions to Externalities3.Public Policies toward Externalities§2 Public Goods and Common Resources1.The Different Kinds of Goods2.Public Goodsmon Resources§3 The Design of the Tax System（#）1.Taxes and Efficiency2.Taxes and EquityChapter 5 Supply and Demand（Ⅲ）：Enterprise behavior and industrial organization8 Class Hours§1Types of Market （#）§2 Firms in Competitive Markets 4 Class Hours1. The Demand Curve and Revenue Curve of the Competitive Firm2. The Short-run Decision and the Supply Curve of the Competitive Firm3. The Short-run Supply Curve of the Competitive Market4.The Competitive Firm's Long-run Decision5.The Long-run Supply Curve of the Competitive Firm6.The Equilibrium Efficiency of the Competitive Firm(2)§3 Monopoly 4 Class Hours1.Why Monopolies Arise2.The Demand Curve and Revenue Curve of the Monopolistic Firm3.The Monopolistic Firm's Short-run and Long-run Decision4.The Welfare Cost of Monopoly5.Public Policy toward Monopolies6.Price Discrimination§4 Oligopoly （#）1.Markets with Only a few Sellers2.Game Theory and the Economics of Cooperation3.Public Policy toward Oligopolies§5 Monopolistic Competition（#）1.The Demand Curve and Revenue Curve of The MonopolisticCompetitive Firm2. The Monopolistic Competitive Firm in the Short-run and Long-run3. Monopolistic Competition and the Welfare of Society4.AdvertisingExercise classes 1 Class Hour Discussion class 1 Class Hour Chapter 6 Supply and Demand（Ⅳ）：The Markets for the factors of production6 Class Hours§1 How Markets Determine Incomes1. Income and Wealth （#）2. Marginal Productivity Determines the Prices of Inputs§2 The Economics of Labor Market1.The Demand and Supply for Labor （#）2.Equilibrium in the Labor Market （#）3. Some Determinants of Equilibrium Wages4.The Economics of Discrimination§3 The Land Market and The Capital Marketnd and Rent2.Capital and Interest§4 Income Distribution （#）1.The Measurement of Inequality2.The Political Philosophy of Redistributing Income3.Policies to Reduce PovertyDiscussion class 2 Class Hours Chapter 7 Supply and Demand（Ⅴ）：(General equilibrium) Market and Welfare （☆）§1 General equilibrium1.Meaning of the Equilibrium2. The Equilibrium Model of Léon Walras3. The Two-sector Model of General Equilibrium§2 Welfare Economics1.The Social Welfare Function2.Equity and EfficiencyChapter 8Uncertainty and Information （☆）§1 Uncertainty in the Economy1. Uncertainties and Risks2. The Effectiveness of Property3. Measurement of Risk Cost§2 Information, Risk and Markets1. Insurance and Risk-sharing2. Private Information and Market3. Risk Management in the Financial MarketsReview class 2 Class Hours Flexible time 4 Class Hours note：（#）Expressed that students learn these contents on its own, and they are included in the scope of examination.（☆）Expressed that students can choose according to their interest in reading, but not included in the scope of examination.Recommended Teaching Materials and Major Reference Books1．[美]曼昆著，梁小民译，《经济学原理（第5版）》，机械工业出版社，2009年2．[美]保罗·萨缪尔森、威廉·诺德豪斯著，萧琛主译，《经济学（第18版）》，人民邮电出版社，2008年3．刘毅军主编，《经济学基础》，石油工业出版社，2006年。