102 Final Exam Actual Topics With Answers

What is a free-rider problem? {Ans: When someone has the ability to receive the benefit of a good without paying for it}When is profit maximized? {Ans: When MR = MC}What is a markup? {Ans: The difference between price & marginal cost}What is a competitive market? {Ans: Includes many buyers and sellers, extremely similar goods, free entry & exit, and firms are price takers}What is the key phrase to remember with a margin & average relationship? {Ans: The average follows the margin}How do we find change in profit? {Ans: Marginal revenue (MR) - Marginal costs (MC)}What does a less differentiated product mean? {Ans: lower markups, less excess capacity, lower price}What is a sunk cost? {Ans: Costs that have been incurred as a result of past decision; unrecoverable}What is the output effect? {Ans: When more units are sold (gain for the firm); always positive}How do you find average variable cost (AVC)? {Ans: [variable cost (TVC)]/[# of units produced (Q)]}What is a club good? {Ans: A good that is excludable and non-rival}What are total costs (TC)? {Ans: The sum of variable and fixed costs (TVC + TFC)}What is the goal of