Essential Microeconomic Concepts Explained
Microeconomics Key Concepts and Principles
Incorrect Response: A perfectly competitive firm is also known as: incorrect price offeror (*Correct: Competitive Price * atomistic acceptor)
Bertrand Duopolists Equilibrium: Competitive balance
Bilateral Monopoly: A market characterized by the existence of a monopolist and a monopsonist.
Final Balance of Trade in General Equilibrium: If Pareto optimum must be: At one point on the contract curve between the initial indifference curve.
General Equilibrium Model Standard Proposition: Cannot have unused resources.
Direct Welfare Economics Theorem: The vector of market-clearing prices, resulting in a Pareto optimal allocation and efficient.
Arrow’s Impossibility Theorem: The impossibility of aggregating individual preferences into a social welfare function.
False Statement Regarding the 2x2x2 Production Model: (False: It is a barter model, which involves two products, two factors, and two consumers) * (Right: The points on the contract curve could not be achieved if all resources were used * The points of the contract curve correspond to the production possibility frontier * The curve connecting all points technically efficient, is here, the contract curve production)
Pure Exchange Theoretical Model: The equilibrium is general and no production model.
Incorrect Answer: Minimum Operating Call in Perfect Competition: Poor; The point (px-CF-CV) greater than 0 (Correct The point is B =- CF * The point at which Cm is equal to CMV * The minimum curve CMV *)
Marginal Cost: Always intersects average total costs and average variable costs at their respective minimums.
Isoquants for Perfect Complements: x = min(Y1, Y2)
Marginal Rate of Substitution: The absolute value of the slope of the indifference curve.
Long-Term Equilibrium Under Monopoly and Competition: Do not achieve their economies of scale.
Law of Diminishing Returns in Short-Term Production: The marginal product is negative for the variable factor.
High Volume Production Diseconomies of Scale: Are a consequence of higher pressure on fixed factors.
Long-Term Monopoly: Does not reach the optimal scale of operations.
Perfect Competition and Absence of External Effects: The industry supply curve will be more elastic than for a single firm.
Profit Under Mark Up: Profit is positive if and only if the net margin of profit is greater than the average fixed cost.
Enterprise Model Leaders Competing with Numerous Competitive Companies: The end result is a lot to offer pure monopoly.
Price Curve Movement: As we move from left to right, implicitly real income increases.
Oligopoly Model, Stackelberg Duopoly Guided by the Amount of Profit Leader: (Answers none of the above * will always be greater than the lower floor will be competed by competitor * * be equal to the competitor)
Property Traded Within an Equilibrium Model: Is generally characterized by their physical properties at the site that are available and the uncertainty that affects them.
Strictly Convex Indifference Curves: Are equivalent to the marginal rate of substitution continuously decreasing from left to right.
Analyzing Income and Substitution Effects Using Hicks: To compensate the consumer’s income, so that the new price maintains the initial utility level.