Details Title: Ch 5-7, 9 Description: Essentials of Economics, 7e - Schiller Total Flash Cards: 47 Created: 10/15/2008 12:52:09		New Users: To study from this flashcard set, or to create your own your own study flash cards, REGISTER HERE. Existing Users: CLICK HERE. Additional Economics Flashcards
Cards in this set: Term Supply Definition The ability and willingness to sell (produce) specific quantities of a good at alternative prices in a given time period. Term Factors of Production Definition Resource inputs used to produce goods and services, e.g., land, labor, capital, entreprenuership. Term Production Function Definition A technological relationship expressing the maximum quantity of a good attainable from different combinations of factor inputs. Term Marginal Physical Product (MPP) Definition The change in total output associated with one additional unit of input. Term Law of Diminishing Returns Definition The marginal physical product of a variable input declines as more of it is employed with a given quantity of other (fixed) inputs. Term Short Run Definition The period in which the quantity (and quality) of some inputs cannot be changed. Term Long Run Definition A period of time long enough for all inputs to be varied (no fixed costs). Term Profit Definition The difference between total revenue and total cost. Term Total Cost Definition The market value of all resources used to produce a good or service. Term Fixed Costs Definition Costs of production that do not change when the rate of output as altered, e.g., the cost of basic plant and equipment. Term Variable Costs Definition Costs of production that change when the rate of output is altered, e.g., labor and material costs. Term Average Total Cost (ATC) Definition Total cost divided by the quantity produced in a given time period. Term Marginal Cost (MC) Definition The increase in total cost associated with a one-unit increase in production. Term Production Decision Definition The selection of the short-run rate of output (with existing plant and equipment). Term Investment Decision Definition The decision to build, buy, or lease plant and equipment: to enter or exit an industy. Term Economic Cost Definition The value of all resources used to produce a good or service: opportunity cost. Term Profit Definition The difference between total revenue and total cost. Term Market Structure Definition The number and relative size of firms in an industry. Term Competitive Firm Definition A firm without market power, with no ability to alter the market price of the goods it produces. Term Competitive Market Definition A market in which no buyer or seller has market power. Term Monopoly Definition A firm that produces the entire market supply of a particular good or service. Term Market Power Definition The ability to alter the market price of a good or service. Term Total Revenue Definition The price of a product multiplied by the quantity sold in a given time period, p x q. Term Competitive Profit-Maximization Rule Definition Produce at that rate of output where price equals marginal cost. Term Market Supply Definition The total quantities of a good that sellers are willing and able to sell at alternative prices in a given time period. Term Equilibrium Price Definition The price at which the quantity of a good demanded in a given time period equals the quantity supplied. Term Barriers to Entry Definition Obstacles that make it difficult or impossible for would-be producers to enter a particular market, e.g., patents. Term Market Mechanism Definition The use of market prices and sales to signal desired outputs (or resource allocations). Term Market Demand Definition The total quantities of a good or service people are willing and able to buy at alternative prices in a given time period; the sum of individual demands. Term Patent Definition Government grant of exclusive ownership of an innovation. Term Marginal Revenue (MR) Definition The change in total revenue that results from a one-unit increase in quantity sold. Term Profit-Maximization Rule Definition Produce at that rate of output where marginal revenue equals marginal cost. Term Economies of Scale Definition Reductions in minimum average costs that come about through increases in the size (scale) of plant and equipment. Term Natural Monopoly Definition An industry in which one firm can achieve economies of scale over the entire range of market supply. Term Contestable Market Definition An imperfectly competitive industry subject to potential entry if prices or profits increase. Term Optimal Mix of Output Definition The most desirable combination of output attainable with existing resources, technology, and social values. Term Market Failure Definition An imperfection in the market mechanism that prevents optimal outcomes. Term Public Good Definition A good or service whose consumption by one person does not exclude consumption by others. Term Private Good Definition A good or service whose consumption by one person excludes consumption by others. Term Free Rider Definition An individual who reaps direct benefits from someone else's purchase (consumption) of a public good. Term Externalities Definition Costs (or benefits) of a market activity brone by a third party; the difference between the social and private costs (benefits) of a market activity. Term Social Costs Definition The full resource costs of an economic activity, including externalities. Term Private Costs Definition The costs of an economic activity directly borne by the immediate producer or consumer (excluding externalities). Term Emission Charge Definition A fee imposed on polluters based on the quantity of pollution. Term Antitrust Definition Government intervention to alter market structure or prevent abuse of market power. Term Income Transfers Definition Payments to individuals for which no current goods or services are exchanged, e.g., Social Security, welfare, unemployment benefits. Term Government Failure Definition Government intervention that fails to improve economic outcomes.