# Shared Flashcard Set

## Details

Microeconomics-Full Sail U
Quiz 2
23
Economics
03/19/2009

Term
 What are 3 total costs
Definition
 Fixed, Variable, Total
Term
 What are 4 per-unit costs?
Definition
 Marginal, Average Fixed, Average Total, Average Variable
Term
 Which type of cost is zero when production is zero?
Definition
 Variable
Term
 Which type of cost is the same regardless of how much is produced
Definition
 Fixed
Term
 what is the cost of producing one or more unit
Definition
 Marginal Cost
Term
 what is the relationship between MC and ATC
Definition
 they intersect at the lowest cost of production, which is the most efficient point on the Average Total Cost line
Term
 Give an Example of Diminishing Marginal Returns
Definition
 the benefit of one more one dollar to a preson with zero dollars is worth more economically than one dollar to a person with 100
Term
 If a firm has fixed costs of \$14,000, and at its current level of production it has total costs of \$25,000, what are its variable costs?
Definition
 \$11,000 – (FC –TC) (FC ± VC = TC)
Term
 If the firm above is producing 22,000 units of something, what is its AVC?
Definition
 \$0.50 – (VC / Units)
Term
 when analyzing a market change, demand elasticity provides information on what?
Definition
 how much quantity responds to a change in price. not which direction or how fast quantity changes.
Term
 What characteristics in a market can make (PED) Price Elasticity of Demand greater (more elastic)?
Definition
 1. Time (Long run, more elastic)2. More Close Substitutes (more substitutes, more demand, more elastic) 3. Necessities vs. Luxuries (Luxuries are more elastic)4. Larger or smaller percentage of total budget (double the price of salt, little change, Less Elastic)5. Narrowly vs. Broadly defined (Narrow is more elastic)
Term
 More competitors tend to make Demand (More) or (Less) Elastic?
Definition
Term
 Necessities tend to have Demand that is (More) or (Less) Elastic?
Definition
Term
 Having less time to adjust tends to make Demand (More) or (Less) Elastic?
Definition
Term
 In the following situations, which changes more-P or Q?
Definition
 Elastic Supply-Demand changes Quantity Inelastic Supply-Demand changes Price (Something becomes more or less desirable) Elastic Demand-Supply changes Quantity (It gets more expensive to MFR, make less) Inelastic Demand-Supply changes Price (Cigarettes) (Elastic is a fairly flat demand curve)
Term
 If price goes from \$2-\$3, what percent change is that?40%  (Difference/ Midpoint) (\$1/\$2.50) Then.... If Quantity Demanded goes from 100-200, what percent change is that?67%   Then..... What is the Price elasticity for the situation above?1.675  (67/40)(Quantity/Price)
Definition
Term
 Is this Elastic or Inelastic?Elastic
Definition
Term
 What does Income Elasticity measure? How much quantity demanded changes when income changesWhat is the formula?
Definition
 Q Diff/Income Diff=Income ElasticityAbove 0= (Normal)Below 0= (Inferior)
Term
 What does X-Price elasticity measure? How much quantity changes when the price of another good changes What is the formula?
Definition
 Q Diff/P Diff of Other Item Above 0=Demand for my product goes up when their price goes up (substitutes)Below 0=Inelastic (Demand for my product goes down when their product gets more expensive-complements)
Term
 Who bears the larger portion of any tax?
Definition
 Depends on demand elasticity-who cares less about the price? Think cigarettes
Term
 Perfectly Competitive Market:
Definition
 Number of sellers: ManyProducts: One – Same Entry/exit: EasyP and Q: Quantity high, price lowLong-run profits: NopeKey Concept-Price Taker: Whatever market price is, dictates what they chargeExamples: Wheat, Corn, Milk
Term
 Pure Monopoly:
Definition
 Number of sellers: OneEntry/exit: ImpossibleP and Q: Price high Quantity LowLong-run profits: Huge, Yes Key Concept-Market Power: Can raise price without losing many customersExamples: Cable, Power, And Water
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