Short-run marginal cost curve

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1) Why does the short-run marginal cost curve eventually increase for the typical firm?

2) How does price elasticity affect the price-quantity combination and segment of the demand curve that the monopolist would prefer for price and output?

3) Why is the monopolistic competitor's demand curve more elastic than a pure monopolist's, but less elastic than a pure competitor's? What factors determine the price elasticity of demand for a monopolistic competitor?

4) What are negative externalities and positive externalities? How do they affect supply and demand curves?

5) Explain what is meant by the principal-agent problem, and relate it to shirking. What are the different pay incentive plans that correct for shirking on the job? How does profit sharing reduce shirking? What is the reason for efficiency wages?

6) "The possibility for gains of trade is due to the fact that different countries face different resources endowments, production costs and geographical locations." Interpret and expand with examples.

Reference no: EM131083085

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