ECON 251 EXAM 2 PURDUE QUESTIONS AND ANSWERS 2026

ECON 251 EXAM 2 PURDUE

Long Run Average Cost Curve - ANSWERS-Lots of ATC curves


economies of scale - ANSWERS-the property whereby long-run
average total cost falls as the quantity of output increases


Diseconomies of scale - ANSWERS-the property whereby long-run
average total cost falls as the quantity of output increases


Concentration ratio - ANSWERS-Top 4 percents of firms added up


HHI - ANSWERS-sum of squared market shares (first 50)


HHI<1500 - ANSWERS-unconcentrated


1500<HHI<2500 - ANSWERS-Moderately concentrated


2500>HHI - ANSWERS-Concentrated


Perfect Competition 3 Traits - ANSWERS-Lots of firms
Products identical (perfectly elastic)
No barriers to entry

, Monopoly three traits - ANSWERS-One firm
No close substitutes
Barriers to entry


Monopolistic Competition three traits - ANSWERS-Lots of firms
Differentiated products
No barriers to entry


Perfect competition long run profit is - ANSWERS-Equal to zero


Monopoly long run profit is - ANSWERS-Able to be positive


Monopolistic Competition long run profit it - ANSWERS-Equal to
zero


Perfect Competition maximizing profit - ANSWERS-MR (same as
P*)= MC


Monopoly maximize profit - ANSWERS-MR=MC


Monopolistic Competition maximizing profit - ANSWERS-MR=MC


Perfect Competition production efficiency - ANSWERS-Minimum of
LRAC