Econ Final Exam

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  • Topic: Balance of payments, Current account, Supply and demand
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Ch. 26
1) List and explain the characteristics of the market structure known as monopolistic competition. 2) List some examples of monopolistically competitive firms. 3) Explain, graphically and verbally, how a firm in monopolistic competition derives its demand curve and marginal revenue (MR) curve. 4) Explain, graphically and verbally, how a firm in monopolistic competition determines what quantity to produce and what price to charge in order to maximize its profits. 5) Explain the impact of advertising on product differentiation. 6) List and explain the characteristics of the market structure known as oligopoly. 7) List some examples of oligopolies.

8) Explain, graphically and verbally, how an oligopolist derives its demand curve and marginal revenue (MR) curve. 9) Explain, graphically and verbally, how an oligopolist determines what quantity to produce and what price to charge in order to maximize its profits. 10) Explain the impact of collusion on oligopoly pricing.

Ch. 28
1) Given some data, calculate Marginal Physical Product (MPP) or (MP). The marginal physical product of labor is the change in total output accounted for by hiring one more worker, holding all other factors of production constant 2) Given some data, calculate Marginal Revenue Product (MRP). The marginal physical product (MPP) times marginal revenue (MR). 3) Given some data, calculate Marginal Factor Cost (MFC). Change in TC/Change in labor. 4) Explain how a firm selling its product in a perfectly competitive market and hiring labor in a perfectly competitive market as well determines how many laborers to hire and the wage rate to pay. The marginal physical product of labor is the change in total output accounted for by hiring one more worker, holding all other factors of production constant. b. Because of the law of diminishing marginal product, the marginal physical product of labor eventually declines.

c. Because this firm is in a competitive labor market, it is a price taker. The firm can hire as much labor as it wants to hire at the going wage rate.
d. The marginal benefit from hiring one more unit of labor is that laborer’s marginal physical product multiplied by the firm’s constant product selling price, or the marginal revenue product (MRP). e. The profit-maximizing rule for hiring is to hire laborers up to the point where the wage rate equals the MRP of labor.

5) Explain how a firm selling its product in an imperfectly competitive market and hiring labor in a perfectly competitive market determines how many laborers to hire and the wage rate to pay. 6) Explain why fewer laborers are hired in an imperfectly competitive product market than in a perfectly competitive product market. 7) Given some data, calculate the profit-maximizing combination of resources. 8) Given some data, calculate the least-cost combination of resources. 9) Define and explain price elasticity of demand for labor and its determinants. There are four principal determinants of the price elasticity of demand for an input. The price elasticity of demand for a variable input will be greater a. the greater the price elasticity of demand for the final product. b. the easier it is to substitute for that variable input.

c. the larger the proportion of total costs accounted for by a particular variable input. d. the longer the time period being considered.

Ch. 29
1) Define monopsony and give an example of a monopsonist. The only buyer in a market. 2) Explain how a monopsonist determines the profit-maximizing # of laborers to hire. (Consider what type of market the product being made is sold in.)Where MFC = MRP 3) Contrast the Marginal Factor Cost (MFC) faced by a monopsonist with that of a firm purchasing labor in a perfectly competitive market. That firm faces an upward-sloping supply of labor curve. Before it can hire more labor, the firm must raise wage rates for all of its employees. b. As a consequence, the marginal factor cost of hiring labor to that...
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