MICROECONOMICS EXAM 2
You will have to do 8 0f these questions. The questions will be selected by me at random. I will make the exam visible to you at 10 a.m. on Tuesday and will stay on Blackboard for the period of the exam. The exam session will be recorded. THE EXAM IS DUE BY THE END OF THE EXAM DAY.
1. Define explicit costs, implicit costs, and economic profit provide your own example.
2. Define diminishing marginal product and marginal cost and provide your own example.
3. Define diminishing marginal product and marginal cost and provide your own example.
4. Define efficient scale and diseconomies of scale and economies of scale and show the
relationship to constant returns to scale. Provide your own example.
5. Discuss the process of profit maximization for a competitive firm. Use figure 1, page 268 as a guide. Unless you have an accommodation letter, you should actually construct the graph, justifying the shapes of the curves.
6. Discuss the process of adjustment to an increase in demand in the short-run and the long-run using Figure 8, page 280 as a guide. You do not have to construct the graphs, but you do need to provide your own example. Originality counts.
7. What is a monopoly and why might arise?
8. Discuss the process of profit-maximization for a monopolist. Use Figure 4, page 295 as a guide. Unless you have an accommodation letter from SAS, you must also draw the
figure.
9. Discuss the meaning of price discrimination, the process by which it is achieved, and provide your own examples. Originality counts.
10. Discuss the source of market power in a monopolistically competitive firm. Examine also the situation in the long-run and in the short-run for such a firm. You do not need to draw the diagrams, but use Figure 2, page 321 and Figure 3, page 322 as guides.
11. Why do monopolistically competitive firms advertise while perfectly competitive firms do not? What forms of advertising can you think of?
12. Define oligopoly and discuss the source of the market power in such an industry.
13. Define antitrust policy and discuss the various controversies mentioned in the book.
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