Midterm 2: Econ 302

Question 1

What is the profit maximizing formula?

Answer 1

MC=MR(P=[same intercept, double the slope])

Question 2

How do you find total profit?

Answer 2

TR-TC

Question 3

How to find price elasticity of demand?

Answer 3

E = (slope Q=)(P/Q)

Question 4

What could be another name for marginal revenue?

Answer 4

market price

Question 5

How to calculate how much profit a firm will earn in the short run?

Answer 5

TR-TC at the profit-maximizing quantity

Question 6

How to calculate the break-even price, and quantity in the market?

Answer 6

ATC(TC/q)=MC
Then, plug the quantity into the MC to find the break-even price

Question 7

How to calculate the long run price and quantity for perfect competition?

Answer 7

ATC(TC/q)=MC
Then, plug the quantity into the MC to find the break-even price

Question 8

How to find how many firms there will be in long equilibrium?

Answer 8

Q(plug the market price in the demand function)= n(number of firms) * q(long run quantity)

Question 9

What is the price elasticity of demand for individual firms in a market?

Answer 9

price elasticity of demand is infinite since individual firms have horizontal demand curves