question
Long run equilibrium
answer
the process of entry or exit is complete - remaining firms earn zero economic profit
Qs=Qd when sufficient time has passed for entry and exit from the industry to occur
Qs=Qd when sufficient time has passed for entry and exit from the industry to occur
question
AVC<
answer
You should produce a quantity if ___ (<>) P
question
ATC<
answer
You will make a profit if ___ (<>) P
question
0, economic
answer
In a perfectly competitive industry with free entry/exit, each firm will have (#) ___ profits in the long run.
question
Marginal cost, long and short
answer
In a perfectly competitive industry in equilibrium, the value of __ (2) is the same for all firms in the __ run
question
Unexploited, maximized, long and short. Minimized
answer
The long run market equilibrium of a perfectly competitive industry is efficient if:
1. No mutually beneficial transactions go ___ (total surplus is ___) for the ___ run
2. Cost per unit is ____
1. No mutually beneficial transactions go ___ (total surplus is ___) for the ___ run
2. Cost per unit is ____
question
Long run
answer
In a perfectly competitive industry with free entry/exit, each firm will have 0 economic profits in the (long/short) run.
question
Short run equilibrium
answer
Qs=Qd taking # producers as given
question
Economic profit
answer
TR - (explicit +implicit costs)
Less than Accounting Profits
Less than Accounting Profits
question
Normal profit
answer
Accounting-Economic profit
Aka implicit costs
Aka implicit costs
question
Accounting profit
answer
total revenue - explicit costs
Greater than Economic Profit
Greater than Economic Profit
question
Economic profit
answer
Which profit do we care the most about and determines if we enter/exti a market?
question
Explicit cost
answer
Actual payments by a firm to its factors of production and other suppliers
question
Implicit cost
answer
Opportunity cost of resources supplied by the firms owners
Aka normal profit
Aka normal profit
question
Economic, >
answer
You SHOULD stay in a market when (economic, accounting, normal) profit is (<>) 0
question
Rationing function of price
answer
to distribute scarce goods to those consumers who value them the most
question
Allocative function of price
answer
Direct resources away form overcrowded markets and toward markets that are underserved
question
Invisible hand
answer
A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all
Results in the most efficient allocation of resources
Results in the most efficient allocation of resources
question
Several
answer
Allocative function of price is when there are (Few/several) markets
question
Free entry and exit
answer
Producers can easily enter/exit
Ensures # of producers in an industry can adjust to changing market conditions and cannot artificially keep other firms out
Ensures # of producers in an industry can adjust to changing market conditions and cannot artificially keep other firms out
question
>, forced to leave
answer
In the long run, profit must be (<>) 0. If it is the other one, you are ___ (3)
question
...
answer
...
question
<
answer
In the short run, profit is (<>) 0
question
Increase, increase. Long run, down
answer
If demand increases, price ___, profit ___ in the short run which will seem pretty to other firms. More will want to enter in the __ (2) which will drive profit ___
question
Economic rent
answer
Portion of payment for an input above supplier's reservation price for that input
question
Driven down to 0
answer
In the long run, economic profit is __ (4) if there are no barriers to entry
question
Not driven down to 0
answer
Economic rent for an input that cannot be easily replicated is ___(5)
question
Work hard, unique skill/talent/preference, be lucky
answer
What are 3 ways to be exceptionally rich/happy?
question
Lost
answer
If a person with a lower reservation price gets the good, there is additional surplus (lost/gained)
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
