ECN2802

Fall 2016 Review for Exam 3

Dr. Dao

· Accounting vs. Economic Profit

· Short run vs. Long run

· Marginal Product

· Average Product

· Law of Diminishing Marginal Productivity

· Production Function

· Fixed costs vs. Variable Costs

· Total Costs

· Average Variable Costs

· Average Fixed Costs

· Average Total Cost

· Marginal Cost

· Why the law of diminishing marginal productivity does not apply in the long run

· Primary for economies of scale

· Perfectly Elastic Demand

· Economies of scale and Diseconomies of scale along long run average total cost curve

· Typical long run average cost curve

· Shape of short run average total cost curve

· Relationship between long run and short run average total costs

· Expected Economic Profit per unit

· Necessary conditions for perfect competition

· Perfectly competitive firms as price takers

· Market demand curve in a perfectly competitive industry

· Marginal revenue

· MR = P for a perfectly competitive firm

· Supply curve for a perfectly competitive firm

· TR-TC approach for finding the profit maximizing level of output

· Shut down price

· Long run equilibrium in perfectly competitive market