Term
| What are the three total costs? |
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Definition
Total Cost (TC)
Fixed Cost (FC)
Variable Cost (VC) |
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Term
| What are the four Per-Unit Costs? |
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Definition
Marginal Cost (MC) Goes Up By One
Average Fixed Cost (AFC)
Average Total Cost (ATC)
Average Variable Cost (AVC) |
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Term
| Which type of Cost is zero when production is zero? |
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Definition
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Term
| What is the relationship between MC and ATC? |
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Definition
| They Cross at the average total lowest cost |
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Term
| What is an example of Diminishing Marginal Returns? |
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Definition
| The point at which adding another employee actual causes you to be less productive |
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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? |
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Definition
VC=TC - FC
25000 - 14000 = 9000 |
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Term
| If the firm has 9000 in variable costs and is producing 22,000 units of something, what is its AVC? |
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Definition
AVC = VC/Q
22000/9000 = 2.44 |
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Term
| When analyzing a market change, demand elasticity provides information on what? |
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Definition
| How much a commodity can be changed in price before it is no longer demanded. |
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Term
| More competitors tend to make Demand (More) or (Less) Elastic? |
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Definition
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Term
| Necessities tend to have Demand which is (More) or (Less) Elastic? |
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Definition
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Term
| Having less time to adjust tends to make Demand (More) or (Less) Elastic? |
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Definition
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Term
What does Income Elasticity measure?
What is the formula?
Above 0=
Below 0= |
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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/ChangeY
Above 0=Normal Goods
Below 0=Inferior Goods |
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Term
What does X-Price elasticity measure?
What is the formula?
Above 0=
Below 0= |
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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 2
Above 0= then the two goods are substitutes
Below 0 equals then the two goods are complements |
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Term
| Who bears the larger portion of any tax? |
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Definition
| Who ever cares about price the least |
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Term
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Definition
| The costs to society created by an inefficiency in the market. |
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Term
| What does government do about Deadweight Loss? |
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Definition
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Term
| Perfect competition will have a what kind of d? |
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Definition
| [image]Perfectly horizontal |
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Term
| Monopolistic will have what kind of D line? |
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Definition
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Term
Graphically, which curve can help you tell for certain whether a market is perfectly competitive or one of the other types?
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Definition
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Term
| If price goes from $2-$3, what percent change is that? |
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Definition
End value – start value / midpoint * 100
3-2/250*100
1/2.50*100
.40*100
40% |
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Term
| If Quantity Demanded goes from 100-200, what percent change is that? |
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Definition
End value – start value / midpoint * 100
200-100/150 *100
100/150 *160
.67*100
67% |
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Term
What is the Price elasticity for the situation below?
$2.00 - $3.00 = 40% Change in price
100 – 200 67% Change in quantity
Is this Elastic or Inelastic? |
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Definition
Es= %change in q / % change in p
67/40= 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 |
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Term
| What are the characteristics of a Perfectly Competitive Market? |
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Definition
Number of firms: Has the most firms
Control over Price: None
Product Differences: None
Barriers to Entry: None
Example: Wheat |
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Term
| What are the characteristics of a Monopoly? |
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Definition
Number of firms: 1
Control over price: Complete
Product differences: None
Barriers to entry: Insurmountable
Examples: Local Electricity |
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Term
| What are the characteristics of Monopolistic Competition? |
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Definition
Number of firms: Many
Control over price: Limited
Product differences: Some
Barriers to entry: Low
Examples: Convenience stores |
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Term
| What are the characteristics of an Oligopoly? |
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Definition
Number of firms: few
Control over price: some
Product differences: None or some
Barriers to entry: Substantial
Examples: Automobiles |
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Term
| Firms in monopolistically competitive markets advertise because: |
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Definition
| They want to point out product differences. |
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Term
| What do opponents of advertising say is bad about it? |
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Definition
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Term
| What do supporters of advertising say about it? |
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Definition
| It helps provide valuable information |
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Term
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Definition
| A firm that can alter its rate of production and sales without significantly affecting the market price of its product. |
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Term
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Definition
| the ability of a firm to alter the market price of a good or service. |
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Term
| What is product differentiation? |
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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. |
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Term
| What are interdependent firms |
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Definition
| Businesses that have to take into account likely reactions of rivals to any change in price and output |
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