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MOD 2 ECON (Costs of prod (TR=PxQ (TotCost=Implicit+Explicit costs), •…
MOD 2 ECON
Costs of prod
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When MC < ATC, ATC is falling.
When MC > ATC, ATC is rising.
The MC curve crosses the ATC curve at the ATC curve’s minimum
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:red_flag:Economies of scale: ATC falls as Q increases.
Constant returns to scale: ATC stays the same as Q increases.
Diseconomies of scale: ATC rises as Q increases.
LRATC
Q
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Monopoly
• A firm that is the sole seller of a product without close substitutes
• Has market power
• Bc of barriers to entry
Barriers to entry: resources, govt reg, prod process (nat monopoly)
Demand curve 
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Oligopoly
Prisoner's dilemma, cooperation
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Noncooperative oligopoly equilibrium: bad for oligopolists, bad or good for son
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Public policies: anti-trust, etc.
MOD 3
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Savings, Investments, and the Financial System (Ch26)
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Loanable funds
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Supply (savings), demand (investment)
:red_flag:Eq'm = The equilibrium quantity of loanable funds equals equilibrium investment and equilibrium saving.
Public policy
Saving incentives
Tax incentives=> :arrow_up:loanable funds :arrow_down:eq'm interest rate :arrow_up:eq'm q o/loanable funds
Investment incentives
Investment tax credit=> :arrow_up:d o/loanable funds :arrow_up:eq'm rate :arrow_up:eq'm q o/loanable funds
:point_up: budget deficit causes :point_down: in investment
• The government borrows to finance its deficit, leaving less funds available for investment: crowding out
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