# Shared Flashcard Set

## Details

Microeconomics Quiz 2
Full Sail Principles of Microeconomics Quiz 2
33
Economics
01/25/2009

Term
 What are the three total costs?
Definition
 Total Cost (TC)Fixed Cost (FC)Variable Cost (VC)
Term
 What are the four Per-Unit Costs?
Definition
 Marginal Cost (MC) Goes Up By OneAverage Fixed Cost (AFC) Average Total Cost (ATC)Average Variable Cost (AVC)
Term
 Which type of Cost is zero when production is zero?
Definition
 Variable Cost
Term
 What is the relationship between MC and ATC?
Definition
 They Cross at the average total lowest cost
Term
 What is an example of Diminishing Marginal Returns?
Definition
 The point at which adding another employee actual causes you to be less productive
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
 VC=TC - FC25000 - 14000 = 9000
Term
 If the firm has 9000 in variable costs and is producing 22,000 units of something, what is its AVC?
Definition
 AVC = VC/Q22000/9000 = 2.44
Term
 When analyzing a market change, demand elasticity provides information on what?
Definition
 How much a commodity can be changed in price before it is no longer demanded.
Term
 More competitors tend to make Demand (More) or (Less) Elastic?
Definition
 More Elastic
Term
 Necessities tend to have Demand which is (More) or (Less) Elastic?
Definition
 Less Elastic
Term
 Having less time to adjust tends to make Demand (More) or (Less) Elastic?
Definition
 Less Elastic
Term
 What does Income Elasticity measure?What is the formula?Above 0=Below 0=
Definition
 measures the responsiveness of the quantity demanded of a good to the change in the income of the people demanding the good.Ed =Y1 + Y2 / Q1 + Q2 * ChangeQ/ChangeYAbove 0=Normal GoodsBelow 0=Inferior Goods
Term
 What does X-Price elasticity measure?What is the formula? Above 0= Below 0=
Definition
 the response of demand for one good to changes in the price of another good. % ∆ in Qd for good 1 / % ∆ in price of good 2Above 0= then the two goods are substitutesBelow 0 equals then the two goods are complements
Term
 Who bears the larger portion of any tax?
Definition
 Who ever cares about price the least
Term
Definition
 The costs to society created by an inefficiency in the market.
Term
Definition
 Anti Trust Laws
Term
 Perfect competition will have a what kind of d?
Definition
 [image]Perfectly horizontal
Term
 Monopolistic will have what kind of D line?
Definition
 Downward Sloping.
Term
 Graphically, which curve can help you tell for certain whether a market is perfectly competitive or one of the other types?
Definition
 D Curve
Term
 If price goes from \$2-\$3, what percent change is that?
Definition
 End value – start value / midpoint * 1003-2/250*100 1/2.50*100.40*10040%
Term
 If Quantity Demanded goes from 100-200, what percent change is that?
Definition
 End value – start value / midpoint * 100200-100/150 *100100/150 *160.67*10067%
Term
 What is the Price elasticity for the situation below?\$2.00 - \$3.00 = 40% Change in price100 – 200 67% Change in quantityIs this Elastic or Inelastic?
Definition
 Es= %change in q / % change in p67/40= 1.675 if elasticity is greater than or equal to one, the curve is considered to be elastic. If it is less than one, the curve is said to be inelastic.So this is Elastic
Term
 What are the characteristics of a Perfectly Competitive Market?
Definition
 Number of firms: Has the most firmsControl over Price: NoneProduct Differences: NoneBarriers to Entry: NoneExample: Wheat
Term
 What are the characteristics of a Monopoly?
Definition
 Number of firms: 1Control over price: CompleteProduct differences: NoneBarriers to entry: InsurmountableExamples: Local Electricity
Term
 What are the characteristics of Monopolistic Competition?
Definition
 Number of firms: ManyControl over price: LimitedProduct differences: SomeBarriers to entry: LowExamples: Convenience stores
Term
 What are the characteristics of an Oligopoly?
Definition
 Number of firms: fewControl over price: someProduct differences: None or someBarriers to entry: SubstantialExamples: Automobiles
Term
 Firms in monopolistically competitive markets advertise because:
Definition
 They want to point out product differences.
Term
Definition
 It raises costs
Term
Definition
 It helps provide valuable information
Term
 What is a price taker?
Definition
 A firm that can alter its rate of production and sales without significantly affecting the market price of its product.
Term
 What is Market Power?
Definition
 the ability of a firm to alter the market price of a good or service.
Term
 What is product differentiation?
Definition
 is the process of distinguishing the differences of a product or offering from others, to make it more attractive to a particular target market.
Term
 What are interdependent firms
Definition
 Businesses that have to take into account likely reactions of rivals to any change in price and output
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