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Too short to change to size of the firm's plant
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The short run is a time period that is
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Can; can; hence there are no fixed costs associated to fixed inputs
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In the long run, the firm ____ changed the number of workers it employs and ___ change the size of its plant
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Total product/ quantity of labor
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Average product is equal to
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Total product
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The marginal product of labor equals the change in __ fro a one-unit increase in the quantity of labor
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Marginal product of an additional worker exceeds the marginal product of the previous worker
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Marginal returns always occur when the
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Variable input, with a given quantity of fixed inputs, the marginal product of the variable input eventually decreases
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The law of decreasing returns states that as a firm uses more of a
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Variable input
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The total product curve depicts the relationship between total product and
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Difficulties of coordinating and controlling a large enterprise
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Diseconomies of scale is a results of
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All costs are variable costs
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In the long run,
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An implicit
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A cost incurred in the production of a good or service for which the firm does not need to make a direct monetary payment, is referred to as ___ cost
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An explicit
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The cost that a firm pays in money to hire a resource is referred to as ___ cost
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Total variable cost and total fixed cost
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In economics, total opportunity cost includes explicit and implicit costs. Assuming implicit costa are zero, total cost would be equal the sum of
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The change in total cost that results from a one-unit increase in output
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Marginal cost is equal to
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Average fixed cost plus average variable cost
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Average total cost equals
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Maximize profit
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The primary goal of a business firm is to
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Marginal revenue equals marginal cost
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A firms maximizes its profit by producing the amount of output such that
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Perfect Competition
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The market that has the largest number of firms, marginal revenue is equal to the market price, farming is the best example
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Monopoly market type is characterized by
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One firm sells a good that has no close substitutes and a barrier blocks entry for other firms
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The market price
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The price charged by a perfectly competitive firm
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Its demand curve is horizontal
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We know that a perfectly competitive firm is a price taker because
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Price is at least equal to the minimum average variable cost
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A perfectly competitive firm will continue to opera in the short run when the market price is below its average total cost if
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Its marginal cost curve above the AVC curve
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Perfectly competitive firm's short run supply curve is
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Decrease in market supply
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To eliminate losses in perfectly competitive market, firms exit the industry. This exist results in
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Makes zero economic profit
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In the long run, a perfectly competitive firm will
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Barrier to entry
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Anything that protects a firm from the arrival of new competitors
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Natural monopoly exists when
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One firm can supply an entire market at a lower average total cost than two or more firms
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Monopolistic Competition
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An industry with a large number of firms, differentiated products and free entry and exit is
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A monopoly will arise if
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The town council passes a law granting Nick;s Pizza the exclusive right to operate in that town
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Market demand and the firm's demand
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What are the same for a monopoly
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A monopoly is
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able to set the price for its product
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Price discriminate, a firm must
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be able to identify and separate different types of buyers and sell a product that can not be resold
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Can make only zero economic profit in the long run
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Monopolistic competition is similar to a firm in perfect competition because they both
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Quality price and marketing
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Product differentiation allows a firm to compete with other firm on the basis of
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Generally not efficient
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Unlike perfectly competition markets, oligopolies and monopolies are
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Duopoly
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two firm oligopoly
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Cartel
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a group if firms acting to raise price, decrease output and increase economic profit
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One firm's profits are affected by other firm's action
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The fact that firms in oligopoly are interdependent that
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Nash Equilibrium
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Equilibrium in which each player takes the best possible action given the action of each player
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Increasing Marginal Returns
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Occurs when the marginal product of an additional worker exceeds the marginal product of the previous worker
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Law of decreasing Returns
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As a firm uses more of a variable input, with a given quantity of fixed inputs, the marginal product of the variable input eventually decreases
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Average fixed cost
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is the total fixed cost per unit of output
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Average Product
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is the total product divided by the quantity of a factor of production. Total product divided by the quantity of labor employed
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Total Variable cost
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is the cost of the variable factor of production used by a firm the cost of labor to change its output in the short run a firm just change the quantity of its labor it employs doesn't change as output changes
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Total fixed cost
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is the cost of a form's fixed factors of production used by a firm the cost of land capital and entrepreneurship doesn't change as output changes
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Average total cost
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total cost per unit of output which equals average fixed cost plus average variable cost.
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