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

Exam 4 Lectures 5-6

by: Karlee Castleberry

Exam 4 Lectures 5-6 Econ 2020

Marketplace > Auburn University > Business > Econ 2020 > Exam 4 Lectures 5 6
Karlee Castleberry
GPA 3.1

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 cover Dr. Finck's lectures 5 and 6 for exam 4! :)
Principles of Economics: Microeconomics
William M. Finck
Class Notes
25 ?




Popular in Principles of Economics: Microeconomics

Popular in Business

This 5 page Class Notes was uploaded by Karlee Castleberry on Wednesday April 6, 2016. The Class Notes belongs to Econ 2020 at Auburn University taught by William M. Finck in Spring 2016. Since its upload, it has received 29 views. For similar materials see Principles of Economics: Microeconomics in Business at Auburn University.


Reviews for Exam 4 Lectures 5-6


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: 04/06/16
Econ 2020 Exam 4 Lecture 5-6 [definition formula relationships between variables]  Key for exam 4: know difference between market structure  Price discrimination- the practice of charging different groups of buyers different prices base on differencesdin E (price elasticity of demand) o Ex: Charging grandpa less than a college student o 3 conditions necessary for PD:  1. Some degree of market power (ability to control price)  2. Two or more groups of buyers with different elasticity’s  3. Prevention of resale o D1 D2 o 1. Elastic 1. Inelastic o 2. Lower price 2. Higher price P2 P1 D1 MC MR1 MR2 D2 Qd1 Qd2  Cases against monopoly o 1. Contrived scarcity- Q < Q ; P > P m pc m pc P M MC = ATC (=S ) PPC PC Q M QP C o 2. Deadweight Loss A C B D E F MC = ATC (=SPC MR D QM QP C Consumer surplus (PC) – Triangle ADF Consumer Surplus (M) – ABC Profit (M) – BDEC Deadweight loss - CEF  Case for monopoly o Technological Advance- if monopolist spends ∏ on research and development, then monopoly may create faster growth over time PC growth Monopoly growth 2 {Lecture 6}  Monopolistic Competition o Characteristics:  1. Many, small buyers and sellers  2. No barriers to entry  3. Differentiated products o Implications:  1. No individual can affect Pe or Qe  2. LR ∏ = 0  3. Advertising / Price makers o SR profit maximization (monopolistic comp.) S MC P* ATC ∏ ATC MR D Q* Q Do this vs. Long Run for test practice: o LR profit maximization MC ATC P* MR D Q* 3  When ∏ > 0 in SR, then in the LR…  1. Firms enter  2. D and MR fall  3. P* and Q* fall  4. ∏ = 0  NOTE: negative profit is possible in the short run  Advertising o Many sellers = small demand o Close substitutes = highly elastic demand o Advertising- a seller’s activities in communicating its message about its product to potential buyers  Goals:  1. Increase D  2. Decrease E d o Positive effects (for social welfare):  1. Decreases search and information costs  2. Facilitates the introduction of new products o Potential negative effects (for social welfare):  1. May be persuasive rather than informative, designed to alter preferences  2. May establish brand-name loyalty, increasing monopoly power  3. Competing ads may cancel each other out, resulting in a waste of resources that does not alter demand  Cases against monopolistic competition 4 MC ATC P* = ATC min ATC MC MR D Q* Q min ATC o Excess capacity- production is less than what is achievable or optimal for a firm. The demand in the market for the product is below what the firm could potentially supply to the market.  Case for monopolistic competition o Expanding consumer options through product variety adds value by more fully matching consumer tastes 5


Buy Material

Are you sure you want to buy this material for

25 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."

Janice Dongeun University of Washington

"I used the money I made selling my notes & study guides to pay for spring break in Olympia, Washington...which was Sweet!"

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."

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.