# Lecture Slides
📗 Long Version:
Slides
📗 Short Version:
Slides
📗 Note (June 28): The AC and AVC minimization when finding shutdown and exit price should be minimizations with respect to x, NOT p (as in the original slides, even though they give the same answers). Please download the updated slides for the corrected version. Sorry for the confusion.
📗 Note (July 1): Alternative way of finding shutdown and exit prices by setting profit equal to -FC or 0 added to the slides. Updated expression for long run industry supply.
# List of Topics and Examples
📗 Socrative Game:
(1) Two-thirds of the mean game
Results:
Morning ;
Afternoon ;
Video: Review
(2) Keynesian beauty contest
Results: Morning (SRFS 12%, LRFS 33%, SRIS 14%, LRIS 41%) ; Afternoon (SRFS 7%, LRFS 44%, SRIS 4%, LRIS 44%)
📗 Definitions and Theorems:
📗 Algorithms:
(1) Finding short run firm supply
(2) Finding long run firm supply
(3) Finding short run industry supply
(4) Finding long run industry supply
📗 Examples:
(1) Quandratic cost function example
📗 Problems:
File:
Questions ;
Answers.
(1) Cobb-Douglas production functions
Update July 16: Part 2 has infinite supply, not 0
(2) Leontief production functions
Update July 16: Part 1 computation mistake
(3) Cubic cost functions (Correction: FC should be 9, not 1; impossible to solve with 1)
(4) Firms with different costs
Workbook (recommended): 23.7, 23.8, 23.9, 24.4, 24.7, 24.8
Workbook (doable): 23.1, 23.2, 23.3, 23.4, 23.5, 23.10, 24.1, 24.2, 24.10, 24.11
# Related Questions
(8) Why is the long run cost curve a piecewise function? A: No, it is just a constant. The piecewise function is just using more precise mathematical notations, there is no need to do that for the exam:
Video Explanation.
(7) How to Lagrange the cost minimization problem in the lecture? A: Don't do it. But, video:
Link.
(6) Why can we set MC = AC to find long run industry supply? A: LRIS is constant at min AC, and finding minimum AC is the same as finding the intersection of MC and AC, because MC always intersect AC at its minimum. Also explained in a video:
Link.
(5) Is the supply curve the same as MC? A: Supply curve is NOT MC: (1) Supply is quantity as function of price; MC is cost as a function of quantity. (2) Supply is never negative, and is strictly positive only above shutdown price: MC can be negative.
(4) Why is long run industry supply equal to MC in Fall 2013 Midterm 2 Q4(b)? A: Because MMC is constant, AC is also constant, meaning the minimum AC occurs at that same constant. Therefore, LRIS which is equal to min AC is also the same constant.
(3) Why is shutdown price equal to minimum AVC? A: Explained in video:
Link.
(2) If the minimizer of AVC or AC is x* = 0, is AVC = VC / x or AC = TC / x undefined? A: Yes, in that case, technically, we should use pi(p) = -FC and pi(p) = 0 to find shutdown and exit prices, I have updated the slides to show this alternative method. The problem is also explained in the video:
Link
(1) Could you explain the difference between demand derivation and supply derivation again? A: Yes, in video:
Link