Shared Flashcard Set

Details

Ch. 5-8, Exam 2
Market Structures
44
Economics
Undergraduate 2
10/27/2009

Additional Economics Flashcards

 


 

Cards

Term
why do some professors give frequent quizzes?
Definition
to ensure attendance they give quizzes because there is a marginal cost if you don't attend.
Term
What are the two "true costs"?
Definition
Implicit and Explicit
Term

what is a fixed cost?

->two examples

Definition

costs that do not vary with level of business.

ex. rent, insurance (monthly payments)

Term

What is a variable cost?

-> one example

Definition

costs that vary with level of business.

ex. wages of assembly workers

Term
What is an implicit cost?
Definition
cost of using your own resources
Term
What is an explicit cost?
Definition
costs that involve monetary payments
Term
Nature/Characteristics of Pure Competition (4)
Definition

1. Lrg # of firms with small sizes

2. Selling P is determined by MKT.

3. Sell identical products

4. Easy entry & easy exit

Term
What is MKT power?
Definition
MKT power refers to the ability to influence MKT p of a product
Term
Who has MKT power (p takers or p searchers)?
Definition
P Searchers
Term
What are the two sources of MKT power?
Definition

1. Product Differentiation

2. Controlling LRG shares of supply

Term

Four ways to differentiate a product

D.U.A.L

Definition

D- difference in design (material)

U- unique features (rolls royce)

A- advertising (aflac)

L- location (unique, convenient)

Term
Example of Pure Competition Firm
Definition
Grain Farmers
Term
Example of Monopolistic Comp. Firm
Definition
Beauty Salon
Term
Example of Oligopoly Firm
Definition
Cigarettes
Term
Example of Monopoly Firm
Definition
Electric Company
Term
3 Tactics Oligopolists use to avoid price competition.
Definition

1. Collusion

2. P leadership

3. Conscious Parellelism

Term

In oligopolists tactics, what is collusion?

An example of collsuion?

Definition

agreement among sellers to fix prices

ex. Cartels

Term
In oligopolists tactics, what is P leadership?
Definition
game of follow the leader, all firms folllow p raise
Term

In oligopolists tactics, what is conscious parellelism?

2 examples.

Definition

A situation in which they adopt similar policies w/o discussion.

a. firms provide same discounts to LRG buyers like walmart

b. all firms raise p at same time of yr like airlines.

Term
What is Allocative Efficiency?
Definition
production of most desired good in proper quantity up to where MSB=MSC
Term
What is Marginal Cost?
Definition
the cost of producing an additional unit of output
Term

What is short-run cost of production?

+ one example

Definition

time period in which at least one input can't be changed.

ex. capital (1-6 months)

Term

What is Long-Run?

+ one ex.

Definition

time long enough for all inputs to be varied

ex. nothing is fixed in the long run

Term
fixed cost + variable cost= _______
Definition
Total cost
Term
when you divide TC, FC, and VC by Q you can get __________.
Definition
the ATC, AVC, and AFC
Term

to find TC, you can:

a.__________

b.__________

Definition

a. multiply TC by Q

b. add FC and VC

Term
What is Marginal Revenue?
Definition
additional revenue firm gets from selling a unit of output
Term
to find the sale profit, you have to subtract _ from __
Definition
MR-MC= sales profit
Term
When MR<MC, you have to ________ output
Definition
decrease
Term

What does it mean when MR=MC for a firm?

What happens to production?

Definition
It means they are at profit max. level and all production is stopped.
Term
When MR>MC, the firm has to _______ output to ensure profit max.
Definition
Increase output
Term
Profit max. point for Purely Competitive firms is where ____ meets _____
Definition
where MR=MC
Term
What is Production Efficiency
Definition
When a firm produces at min. ATC
Term
When finding loss, profit, and normal profit, TR=____
Definition
Price(of item) x Q (# sold)
Term
When finding loss, profit, and normal profit, TC= _____
Definition
ATCxQ
Term

Econ Profit:

TR is < or > then TC

P is > or < then ATC

Definition

TR is > TC

P is > ATC

Term
Definition for Econ loss/ profit, and normal profit.
Definition

Econ loss- revenue below a normal profit

Econ Profit- Revenue above a normal profit

Normal Profit- breaking even, no profit or loss

Term
Cartel Definition
Definition
group of producers acting together to control output/ suppl as well as price
Term
The profit max. rule for P searchers:
Definition
p > MR
Term
What is oligopoly?
Definition
industry dominated by a few relatively LRG sellers that are protected by entry barriers.
Term

2 distinguishing features of oligopoly.

 

Definition

a. considers reactions of rivals before changing P

b. P competition among themselves. (coke, pepsi)

Supporting users have an ad free experience!