Questions from Microeconomics

Q: When will the private cost of producing a good differ from the

When will the private cost of producing a good differ from the social cost? Give an example. When will the private benefit from consuming a good differ from the social benefit? Give an example.

Q: What are economies of scale? What are four reasons that firms

What are economies of scale? What are four reasons that firms may experience economies of scale?

Q: What are diseconomies of scale? What is the main reason that

What are diseconomies of scale? What is the main reason that a firm eventually encounters diseconomies of scale as it keeps increasing the size of its store or factory?

Q: What are the three conditions for a market to be perfectly competitive

What are the three conditions for a market to be perfectly competitive?

Q: What is a price taker? When are firms likely to be

What is a price taker? When are firms likely to be price takers?

Q: Draw a graph showing the market demand and supply curves for corn

Draw a graph showing the market demand and supply curves for corn and the demand curve for the corn produced by one corn farmer. Be sure to indicate the market price and the price the corn farmer rece...

Q: Explain whether each of the following is a perfectly competitive market.

Explain whether each of the following is a perfectly competitive market. For each market that is not perfectly competitive, explain why it is not. a. Corn farming b. Coffee shops c. Automobile manufac...

Q: The late Nobel Prize–winning economist George Stigler once wrote,

The late Nobel Prize–winning economist George Stigler once wrote, “the most common and most important criticism of perfect competition … [is] that it is unrealistic.” Since few firms sell identical pr...

Q: Suppose an economist develops an economic model and finds that “it

Suppose an economist develops an economic model and finds that “it works great in theory, but it fails in practice.” What should the economist do next?

Q: Suppose that Jill Johnson has to choose between building a smaller restaurant

Suppose that Jill Johnson has to choose between building a smaller restaurant and a larger restaurant. In the graph on the next page, the relationship between costs and output for the smaller restaura...