ECON 251 EXAM 3 – PURDUE CORRECT QUESTIONS & ANSWERS(RATED A+)

ECON 251 EXAM 3 – PURDUE
CORRECT QUESTIONS &
ANSWERS(RATED A+)
Max profit - ANSWERMR = MC

substitution effect - ANSWERPx/Py
effect of change in "relative price"

Profit - ANSWERTr-Tc
or
(mc)(q)-TC
or
q(p-ATC)

MPl - ANSWERchange in Q / change in L

Marginal utility per dollar - ANSWERMu/p

Mu= change in U/ change in Q

P ( for natural) - ANSWERMC, but MC<Atc

So P<ATC

when P=AVC
(perfect competition) - ANSWERshut down point

when MC < AVC - ANSWERdecrease AVC

Allocative efficiency - ANSWERMB=MC

MRS (marginal rate of substitution) - ANSWERPx/Py
or
slope

Perfect price discrimination - ANSWERoutput satisfies allocative efficiency

income effect - ANSWER"real income"
- purchasing power
- move to new IC
Max Utility - ANSWERMUx/Px = MUy/Py