New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Economics 2005 Exam 2 Review

by: Tim Reynolds

Economics 2005 Exam 2 Review ECON 2005

Tim Reynolds
Virginia Tech

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

These notes contain every subject covered throughout the notes as well as specific examples and concepts will you will be tested on in Exam 2. Good Luck!
Principles of Economics
Steve Trost
Study Guide
Economics, Study Guide, Microeconomics
50 ?




Popular in Principles of Economics

Popular in Economcs

This 2 page Study Guide was uploaded by Tim Reynolds on Tuesday March 29, 2016. The Study Guide belongs to ECON 2005 at Virginia Polytechnic Institute and State University taught by Steve Trost in Spring 2016. Since its upload, it has received 58 views. For similar materials see Principles of Economics in Economcs at Virginia Polytechnic Institute and State University.


Reviews for Economics 2005 Exam 2 Review


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 03/29/16
Exam 2 Review Structure 36 multiple choice questions – evenly distributed (fewer from chapter 6) 48 minutes Topics Chapter 6: - Theory of the consumer o Consumers maximizing utility given their income o Marginal utility  Law of diminishing marginal utility o Maximizing utility (MU/P=MU/P for all goods and spend all income) o LDMU and a regressive tax system - Budget lines – rotate if P changes, shift out if income increases (I/P1 vs. I/P2) - Consumers o Consumer surplus- above P below D curve o Producer surplus- below P and above S curve o Total surplus- CS + PS o Deadweight loss- whenever Q is not “right.” (Not in equilibrium) Chapter 7: - Inputs: Minimizing Costs o Land, Labor, Capital, Entrepreneurial skill. o Production technology. Choose technology and inputs to minimize costs for each level of output. o Marginal productivity and marginal costs. o Law of diminishing returns (in the short run). - Firms, production, and costs (Ch. 7) o Firms maximize profits (TR-TC) o Accounting vs. economic costs (implicit and explicit) o Costs (TC,FC,VC,AFC,ATC,MC) o Know how tall the costs relate to each other (TC=FC+MC, MC= change in TC / change in Q, MC hits AC at minimum) o LRAC- economies of scale, diseconomies of scale, “minimum efficient scale” - Short run costs o ATC-AVC = AFC Chapter 8: - Perfect competition o “price takers” o Homogeneous product o Everyone has access to full information o Unrestricted entry/exit to market o Prices are not fixed/regulated o Be familiar with “picture” of the firm. o Flat demand curve for individual firm o P=MC (MC=MR) gives profit – maximizing quantity o P=MC is efficient from the society’s standpoint o LR competitive equilibrium o Allocative and productive efficiency in the LR - Short and long run in PC o Shut down vs. production n the short run  Stay if P> or equal to AVC, shut down if P< AVC (lose fixed costs)  Short run vs. Long run Chapter 9: - Monopoly o There are no close substitutes and there are significant barriers to entry (patents, government, etc.) o Monopolist’s demand curve is the market demand curve o MR is not the same as price or the demand curve since a monopolist must lower price in order to sell more. o To maximize profits, choose Q such that MR=MC then choose price off demand curve o Know where profits are on picture o Not efficient since P>MC (Q to low, P to high) and not at minimum of ATC - Monopolies, etc. o Natural monopolies (large economies of scale) o Price discrimination:  First (perfect)  Second degree (unobservable characteristics)  Third degree (observable characteristics) BEST WAYS TO STUDY: 1. Read over notes/copy down important bits 2. Look over graphs/draw pictures 3. Take practice exam 4. Read Book chapters GOOD LUCK!!!!


Buy Material

Are you sure you want to buy this material for

50 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Amaris Trozzo George Washington University

"I made $350 in just two days after posting my first study guide."

Bentley McCaw University of Florida

"I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"

Parker Thompson 500 Startups

"It's a great way for students to improve their educational experience and it seemed like a product that everybody wants, so all the people participating are winning."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.