question

3) does firm exhibit diminishing marginal returns

answer

if second derivative of MPL>0 then yes it does

question

3) MRTS formula

answer

-MPl/MPk

question

3) show if isoquants are strictly convex

answer

if the derivative of MRTS with respect to L is diminishing when L increases, the isoquants are strictly convex

question

3) determine returns to scale of production function

answer

multiply production function by "T" replace KL at end with Q, if the function solved is greater than TQ then constant returns to scale

question

3) screwy "ln" derivative stuff

answer

if -MRTS=(K/L) then Ln(K/L) = LN[MRTS] XXXXX used for fwucky elasticity formula

question

3) lost dollar rule

answer

(MPl/W)=(MPk/R)

question

3) find conditional input demand function

answer

using the "last dollar rule" solve for K, plug this into production function and solve for L' , plug L' into k (above) for K'

question

3) expansion path

answer

using "last dollar rule" , solve for capital. done

question

3) derive long run cost curve

answer

using "last dollar rule", solve for K and L (not k' or l'), plug this into cost and then solve for K and L. plug this K and L back into production function.

question

4) what is profit maximizing level of q

answer

set MC(derivative of cost function) = Price (Q')

question

4) how to know if truly profit maximizing

answer

derivative of MC > 0

question

4) what is maximum profit this firm can earn?

answer

max π = PQ'-C(Q')

question

4) derive short run supply curve

answer

find AVC( cost function divided by Q) and do AVC=MC solve for q. the SR supply curve is MC above the q solved above?

question

4) what price should firm shut down?

answer

take the q solved for MIN AVC above and plug into AVC

question

5) find total revenue (TR)

answer

the price function multiplied by Q

question

5) find marginal revenue (MR)

answer

derivative of total revenue

question

5) find maximum output monopolist would produce

answer

set MR=0 and solve for q

question

5) find profit maximizing price and quantity for monopoly

answer

set MR=MC solve for Q' then plug Q' into price function for P'

question

5) what is the maximum profit the monopolist can earn

answer

max π = P'Q'-MC(Q')

question

5) what price and output level if monopoly was instead perfectly competitive

answer

set P=MC solve for q and p is given in problem

question

5) dead weight loss formula

answer

.5(P'-P)(Q'-Q)

question

AFC

answer

fixed cost portion divided by q

question

AC

answer

=c/q=AVC+AFC

question

in short run VC=WL

answer

...

question

u shape of mc curve

answer

if Mpl increases as mc decreases and vice versa

question

long run

answer

all costs are variable

question

price taker = ?

answer

perfectly competitive ( Normal )

question

price maker = ?

answer

monopoly

question

how to tell if firm or monopoly

answer

if mr<p monopoly

if mr=p pc firm

if mr=p pc firm

question

produce surplus =

answer

p-mc

question

price/MC ratio

answer

P is # X bigger than MC

question

Lerner Index

answer

p is marked up #% over MC

question

how to get producer surplus

answer

are under linear demand curve and above price, are of triangle with base equal to quantity demanded.