1. SIDES GAME

2. Profit Max. Q 40

3. Unregulated Price 3

4. Social Optimal Price ~2.3ish

5. Fair Return Price 2.1ish

6. Unregulated Profit $40

7. Fair Return Profit ZERO duh P(AR) = ATC

8. Unit Elastic Q 50 (MR=0)

9. Outline DWL

10. Monopolistic Competition
LRATC curve will be TANGENT to D/AR curve

11. Fair Return Price will allow the Monopolist to earn
No accounting profit
No economic profit
A normal profit
No economic loss
A little economic profit

12. What will happen to the unregulated monopolist’s quantity of output if Total Fixed Cost increases? NOTHING!!!

13. Which type of efficiency do monopolistically competitive firms produce?
Allocative nope
Productive nope

14. What is the gap between the profit max
What is the gap between the profit max. Q and the Productively efficient Q for a monopolistically competitive firm called? Excess capacity

15. Which market structures earn zero long run economic profit?
Perfect and monopolistic competition

16. Collusion that occurs without actual communication between firms is called
TACIT

17. Which market structure has highly interdependent firms?
OILIGOPOLY

18. This occurs in a payoff matrix when neither player acting unilaterally can improve his payoff. NASH Equilibrium

19. A player who is best off playing a single strategy regardless of his competitor's strategy has this. Dominant Strategy

20. What is White’s Dominant Strategy? HIGH

21. A monopoly should decrease production if
MR < MC

22. What is the Nash Equilibrium?
This is a dominant
Strategy Nash
Equilibrium.
Both White and
Yellow have a dominant
Strategy of “high”

23. What is the Dominate Strategy Equilibrium?
See
Previous
Slide

24. Does price discrimination increase or decrease consumer surplus?

25. Which market structure ALWAYS features product differentiation?
Monopolistic competition

26. Colluding oligopolistic firms are called a
A cartel

27. Cartels (without cheating) operate like
monopoly

28. Which will change output?
Lump sum tax
Lump sum subsidy
Per unit tax
Per unit subsidy
Per unit shifts MC which changes the profit maximizing quantity.
Lump sum only affect fixed and total costs, which will alter profit, but not quantity.

29. Consumer surplus under a monopolist employing perfect price discrimination? ZERO!

30. Unregulated monopolies sell less at a higher price

31. What grade will you earn on tomorrow’s test?
If you know all of this stuff, then the answer is an “A”
Look up FRQs from past tests
Check out some youtube videos for any concept your unsure of.
Read through the appropriate unit of your CRACKING THE AP MICROECONOMICS EXAM