ECON 251 EXAM 3 – PURDUE LATEST 2024 GRADED A

ECON 251 EXAM 3 – PURDUE LATEST 2024 GRADED A Max profit MR = MC substitution effect Px/Py effect of change in "relative price" Profit Tr-Tc or (mc)(q)-TC or q(p-ATC) MPl change in Q / change in L Marginal utility per dollar Mu/p Mu= change in U/ change in Q P ( for natural) MC, but MC<Atc So P<ATC Max Utility MUx/Px = MUy/Py ATC TC/Q or AFC + ATC AFC FC/Q TC FC+VC Price giffen good falls? violates law of demand AVC VC/Q P* MR short run some input is fixed MC change in TC/ change in Q when P=AVC (perfect competition) shut down point when MC < AVC decrease AVC Allocative efficiency MB=MC MRS (marginal rate of substitution) Px/Py or slope Perfect price discrimination output satisfies allocative efficiency income effect "real income" - purchasing power - move to new IC APlabor Q/L P<AVC shut down TR PxQ