question
Losses are below what point?
answer
ATC=MC.
question
When are profits maximized?
answer
when MR=MC.
question
Constant-cost industry
answer
a perfectly competitive industry with a horizontal long-run industry supply curve that happens because of the growth of the industry.
question
Allocative efficiency
answer
the last unit produces a marginal benefit to consumers equal to the marginal cost of producing it.
question
Productive efficiency
answer
lowest possible cost.
question
Loss area
answer
below ATC, to price line, makes rectangular area.
question
Break-even point
answer
the interaction of ATC, MC, and D=MR curves.
question
For perfectly competitive firms, price=
answer
marginal revenue.
question
Marginal revenue(MR)
answer
change in revenue per 1 unit of output.
question
Average revenue(AR)
answer
total revenue(TR)/output.
question
Profit
answer
total revenue(TR) - total cost(TC)
question
Perfectly competitive firm's demand curve
answer
faces a horizontal demand curve.
question
Total revenue(TR)
answer
price x quantity sold.
question
Diseconomies of scale
answer
average total cost(ATC) increases as output increases.
question
Constant returns to scale
answer
average total cost(ATC) does not change as output increases.
question
Economies of scale
answer
average total cost(ATC) falls as output increases.
question
Marginal cost
answer
change in total cost/change in output.
question
Price elasticity of demand
answer
percentage change in quantity demanded/percentage change in price.
question
Elasticity
answer
a measure of how sensitive one variable is to changes in another.
question
Price elasticity of demand
answer
Q2-Q1/Q2+Q1/2 / P2-P1/P2+P1/2.
question
ED>1
answer
elastic.
question
ED=1
answer
unit elastic.
question
ED=infinity
answer
perfectly elastic.
question
ED=0
answer
perfectly inelastic.
question
Cross-price elasticity of demand
answer
percentage change in quantity of one good/percentage change in price of another good.
question
What does cross-price elasticity of demand measure?
answer
measures the strength of substitute or complement relationships between goods.
question
Normal necessity
answer
positive but less than 1.
question
Luxury
answer
positive and greater than 1.
question
What is the price elasticity of supply?
answer
how responsive producers are to changes in the market price.
question
Perfectly inelastic curve
answer
is vertical.
question
Perfectly elastic curve
answer
is horizontal.
question
Elasticity is blank in the long run
answer
higher.
question
Price elasticity is blank for luxuries
answer
higher.
question
Total revenue(TR)
answer
price x quantity.
question
Price elasticity of demand
answer
price change in quantity demanded/percentage change in price.
question
Price elasticity of supply
answer
percentage change in quantity supplied/percentage change in price.
question
es=1
answer
unit-elastic.
question
es<1
answer
inelastic.
question
Ps>1
answer
elastic
question
Elasticity of supply will be greater
answer
the more inventory the firm has, the more easily the firm can hire workers, and the longer the time horizon.
question
In the long run, all of a firm's costs are blank
answer
variable costs.
question
Total cost(TC)
answer
fixed cost(FC) + variable cost(VC)
question
Explicit cost
answer
a cost that involves spending money.
question
Implicit cost
answer
a non-monetary opportunity cost.
question
Average fixed cost(AFC)
answer
total fixed cost(TFC)/output.
question
Average variable cost(AVC)
answer
total variable cost(TVC)/output.
question
Average total cost(ATC)
answer
average variable cost(AVC) + average fixed cost(AFC).
question
3 measures of elasticity
answer
price elasticity of demand, cross-price elasticity of demand, and income elasticity of demand.
question
ED<1
answer
inelastic.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
