Term
| What is the shape of a marginal cost curve? |
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Definition
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Term
| On the marginal cost curve when is the firm being most efficient? |
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Definition
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Term
| If the marginal is greater than the average is the average increasing or decreasing? |
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Definition
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Term
| What is the marginal cost equation? |
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Definition
| change in total cost/change in quantity. |
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Term
| When do ecnomies of scale occur? |
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Definition
| When average cost falls as output rises |
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Term
| Why might a firm experience economies of scale? |
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Definition
Specialization, Dimensional Factor,
Improved equiptment |
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Term
| What is the Dimensional Factor? |
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Definition
| Whe a company can buy more raw materials in bulk because output is greater |
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Term
| Why might a firm experience diseconomies of scale? |
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Definition
| Management functions: The bigger the firm the more bureaucracy in a business there will be |
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Term
| When do diseconomies of scale occur? |
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Definition
| When average cost rises as output rises |
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Term
| What is the minimum effiecient scale? |
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Definition
| the lowest rate of output per unit time at which long run average costs for a particular firm are at a minimum |
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Term
| What is to be expected when a minimum efficient scale is large relative to the industry? |
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Definition
| a more concentrated industry ie fewer firms |
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Term
| Constant returns to scale |
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Definition
| when the average cost of production is constant. |
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Term
| What type of demand curve do firms in a perfectly competitive market face? |
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Definition
| perfectly elastic: If they increase their price above market they will sell no product |
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Term
| What is the profit max rule in perfect competition? |
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Definition
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Term
| How do u find total cost on a graph? |
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Definition
| Where the ATC curve crosses the point where your quantity mazimizes profits |
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Term
| What is the ATC equation? |
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Definition
| total cost/total quantity |
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Term
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Definition
| when the price is below the minimum average variable cost |
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Term
| What would price be if you were a social planner trying to plan a perfectly competitive market? |
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Definition
| Price would equal marg cost and price would also equal minimum average cost |
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Term
| When does price equal minimum average cost? |
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Definition
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Term
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Definition
| licenses, franchises, patents, tariffs, gov regs |
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Term
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Definition
| a market in which the economies of scale in production are so large that only a single large firm can earn profit |
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Term
| On the graph of a monopoly when is there zero economic profit? |
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Definition
| When average total cost= price |
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Term
| On the graph when is there neg economic profit? |
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Definition
| When average total cost is greater than price |
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Term
| On the production graph when is there negative economic profit? |
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Definition
| If average total cost is greater than price |
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Term
| What are the necessary conditions for price discrimination? |
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Definition
| market power, diff consumer groups that are easily separated, preventable resale |
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Term
| In perfect competition what is the relationship between the supply curve and the marginal cost curve? |
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Definition
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Term
| What is the key diff between perfect competion and monopolistic competition? |
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Definition
| each firm has differentiated products so each firm hhas some market power |
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Term
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Definition
| a market served by a few firms |
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Term
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Definition
| each firm's decision may be strategically counterd by ther firms |
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