Test#3 Study Guide

The test will consist of 30 True or False and/or Multiple Choice questions, and a graphical analysis section.

The following are a list of topics to study for the test:

The long run industry supply curve
The short run industry supply curve
Profits in the long-run in a perfectly competitive industry with free entry and exit
The quantity vs. price effect under Monopoly
The location of the firm's marginal revenue curve under monopoly
Profit maximization under monopoly
Total surplus under monopoly
The two major public policies toward natural monopolies
Price discrimination definition and examples
How a monopoly can engage in price discrimination
How a monopoly can achieve perfect price discrimination
Market power and elasticity
Collusion vs. cartel
Non-cooperative behavior
Price competition vs. quantity competition
Game theory definition
prisoner's dilemma game
Dominant strategy vs. a Nash equilibrium (non-cooperative equilibrium)
Strategic behavior
Tit for tat strategy
Antitrust policy definition
price war
Tacit collusion
product differentiation
price leadership
non-price competition
Monopolistic competition in the short-run
Monopolistic competition in the long-run
Excess capacity

Graphical Illustration section.