AP Microeconomics Unit 4 Test - Assignment Essays

question

explicit cost

answer

requires an outlay of money

question

implicit cost

answer

value of forgone opportunity

question

accounting profit

answer

total revenue - (explicit cost + depreciation)

question

economic profit

answer

total revenue - opportunity cost

question

implicit cost of capital

answer

income that could have been earned by using capital in the next best alternative

question

marginal revenue

answer

change in total revenue over change in quantity

question

marginal revenue equals marginal cost

answer

optimal output

question

marginal cost curve

answer

nike swoosh

question

marginal revenue cost curve

answer

horizontal line

question

fixed input

answer

quantity can't be varied

question

variable input

answer

quantity can be varied

question

the long run

answer

no fixed inputs

question

the short run

answer

at least one fixed input

question

total product curve

answer

plots marginal product of labor and shaped like solfege re

question

marginal product

answer

change in quantity of output over change in quantity of labor

question

diminishing returns to an input

answer

each additional unit will raise production less than the previous one

question

total cost curve

answer

slopes up due to increasing variable cost

question

average total cost

answer

total cost over quantity

question

average total cost curve

answer

U-shaped because of specialization then diminishing returns on labor; above AVC (it's more, duh)

question

average fixed cost

answer

fixed cost over quantity, falls because of spreading effect

question

average variable cost

answer

variable cost over quantity rises because of diminishing returns to labor

question

minimum cost output

answer

lowest point on ATC or where ATC=MC

question

price takers

answer

cannot affect market price of good or service

question

perfectly competitive market

answer

all firms and consumers are price takers

question

perfectly competitive industry

answer

all firms are price takers

question

market share

answer

how much of total industry output is accounted for by a firm

question

standardized product

answer

good consumers consider to be the same from any firm

question

commodity

answer

good consumer considers to be the same from any firm

question

monopoly

answer

one firm (monopolist) is the only producer of a good with no close substitues

question

barrier to entry

answer

limited resources, economies of scale, technology or government

question

natural monopoly

answer

market condition created and sustained by economies of scale

question

patent

answer

government barrier to entry that gives inventor of a product sole right to profit for 16-20 years

question

answer

government barrier to entry that gives artists lifetime profits

question

oligopoly

answer

few firms hold market power

question

imperfect competition

answer

firms compete but also possess market power

question

monopolistic competition

answer

lots of competing firms with differentiated products and free entry/exit and some ability to set price

question

long run average total cost curve

answer

output vs. average total cost when fixed cost has been minimized at every level of output, U-shaped

question

economies of sale

answer

long run average total cost declines as output increases

question

increasing returns to scale

answer

output increases more than in proportion to an increase in all inputs

question

diseconomies of sale

answer

long run average total cost increase as output increases

question

decreasing returns to scale

answer

output increases less than in proportion to an increase in all inputs

question

sunk cost

answer

money already spent that should be ignored when calculating next move

1 of 42

question

explicit cost

answer

requires an outlay of money

question

implicit cost

answer

value of forgone opportunity

question

accounting profit

answer

total revenue - (explicit cost + depreciation)

question

economic profit

answer

total revenue - opportunity cost

question

implicit cost of capital

answer

income that could have been earned by using capital in the next best alternative

question

marginal revenue

answer

change in total revenue over change in quantity

question

marginal revenue equals marginal cost

answer

optimal output

question

marginal cost curve

answer

nike swoosh

question

marginal revenue cost curve

answer

horizontal line

question

fixed input

answer

quantity can't be varied

question

variable input

answer

quantity can be varied

question

the long run

answer

no fixed inputs

question

the short run

answer

at least one fixed input

question

total product curve

answer

plots marginal product of labor and shaped like solfege re

question

marginal product

answer

change in quantity of output over change in quantity of labor

question

diminishing returns to an input

answer

each additional unit will raise production less than the previous one

question

total cost curve

answer

slopes up due to increasing variable cost

question

average total cost

answer

total cost over quantity

question

average total cost curve

answer

U-shaped because of specialization then diminishing returns on labor; above AVC (it's more, duh)

question

average fixed cost

answer

fixed cost over quantity, falls because of spreading effect

question

average variable cost

answer

variable cost over quantity rises because of diminishing returns to labor

question

minimum cost output

answer

lowest point on ATC or where ATC=MC

question

price takers

answer

cannot affect market price of good or service

question

perfectly competitive market

answer

all firms and consumers are price takers

question

perfectly competitive industry

answer

all firms are price takers

question

market share

answer

how much of total industry output is accounted for by a firm

question

standardized product

answer

good consumers consider to be the same from any firm

question

commodity

answer

good consumer considers to be the same from any firm

question

monopoly

answer

one firm (monopolist) is the only producer of a good with no close substitues

question

barrier to entry

answer

limited resources, economies of scale, technology or government

question

natural monopoly

answer

market condition created and sustained by economies of scale

question

patent

answer

government barrier to entry that gives inventor of a product sole right to profit for 16-20 years

question

answer

government barrier to entry that gives artists lifetime profits

question

oligopoly

answer

few firms hold market power

question

imperfect competition

answer

firms compete but also possess market power

question

monopolistic competition

answer

lots of competing firms with differentiated products and free entry/exit and some ability to set price

question

long run average total cost curve

answer

output vs. average total cost when fixed cost has been minimized at every level of output, U-shaped

question

economies of sale

answer

long run average total cost declines as output increases

question

increasing returns to scale

answer

output increases more than in proportion to an increase in all inputs

question

diseconomies of sale

answer

long run average total cost increase as output increases

question

decreasing returns to scale

answer

output increases less than in proportion to an increase in all inputs

question

sunk cost

answer

money already spent that should be ignored when calculating next move

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