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Microeconomics Quiz#4
Study Questions
19
Economics
Undergraduate 1
11/01/2008

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Term
the increase in total revenue when output sold goes up by one unit
Definition
Marginal revenue
Term
what is left over from total revenue after a firm has paid all of its explicit cost
Definition
Accounting Profits
Term
what is left over from accounting profits after a firm has subtracted its implicit cost
Definition
Economic Profits
Term
MC = MR
Definition
Profit Maximization Point
Term
A firm with a perfectly elastic demand curve has an
Definition
identical MR curve (MR = P)
Term
We say that a firm is operating at peak efficiency if
Definition
its average total cost (ATC) is held to a minimum.
Term
When do firms ultimately push down profits to the break-even point
Definition
in perfect competition
Term
What is the cost of doing business
Definition
Explicit cost
Term
What is a firm’s opportunity cost
Definition
Implicit Cost
Term
Why stay in business if your economic profits are zero?
Definition
You are still making accounting profits
Term
What is the definition of Perfect Competition
Definition
The market has perfect mobility and Perfect knowledge about the market exist
Term
What is the definition of Perfect Competition
Definition
The market has perfect mobility and Perfect knowledge about the market exist
Term
Monopoly is the first of three types of
Definition
imperfect competition
Term
The distinguishing characteristic of imperfect competition is that the firm’s demand curve
Definition
slopes downward to the right
Term
How much output does a monopoly produce in an industry
Definition
ALL
Term
what are some Barriers to Entry
Definition
Economies of scale and legal barriers
Term
what are some Limits to Monopoly Power
Definition
the government or from the market itself
Term
Economies of Scale
Definition
Typically, heavy industry - iron, steel, copper, aluminum, and automobiles -
Term
when is bigness bad?
Definition
Monopolies tend to be inefficient because they do not produce at the minimum point on their ATC
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