question
What is the equation for total revenue?
answer
Price x Quantity
question
What is the equation for marginal revenue?
answer
Change in Total Revenue/change in Quantity
question
What is the equation for marginal cost?
answer
Change in Total Cost/Change in Quantity
question
What is the equation for total cost?
answer
Total Fixed Costs + Total Variable Costs
question
What is the equation for total profit?
answer
Total Revenue - Total Costs
question
What is the equation for marginal profit?
answer
Marginal Revenue - Total Costs
question
What is the primary goal of every business?
answer
To maximize profit
question
What is the first step every business should take in order to reach their primary goal?
answer
How much they should produce (Quantity)
question
What is the general formula that businesses use when deciding how to execute this first step? Why do they use this formula?
answer
Marginal Revenue = Marginal Cost or Marginal Revenue is greater than or equal to Marginal Cost. They use this to determine if they are generating a profit.
question
How do perfectly competitive firms determine the price they should charge? Do they have any control over this price?
answer
Perfectly competitive firms look to the market to determine the price they should charge. They have no control over the price.
question
In a perfectly competitive market _____=_____=_____
answer
P=D=MR
question
If the market price for a perfectly competitive good is $15 and suppliers decrease production from 10,000 to 8,000 units, what will happen to marginal revenue?
answer
Nothing will happen to marginal revenue
question
What equation for profit do we generally use when looking at a graph for a firm in a perfectly or monopolistic competitive market?
answer
P - ATC
question
How do monopolistically competitive firms determine the price they should charge? Do they have any control over this price?
answer
They use MR=MC to find their profit maximizing quantity. They go from this quantity up to the demand curve to see what people are willing and able to pay at that quantity.
question
What is the relevant curve to look at when making a decision to shut-down?
answer
AVC (Average Variable Cost)
question
In perfect competition are there barriers to entry?
answer
No
question
How many sellers are there in perfect completion?
answer
Many
question
What is the nature of products in perfect competition?
answer
Homogeneous (Same)
question
Are there barriers to entry in monopolistic competition?
answer
No
question
How many sellers are there in monopolistic competition?
answer
Many
question
What is the nature of products in monopolistic competition?
answer
Differentiated
question
Are there barriers to entry in a monopoly?
answer
Yes
question
How many sellers are there in a monopoly?
answer
One
question
What is the nature of products in a monopoly?
answer
Heterogeneous (by definition)
question
In a labor market, supply and the demand curves are made up of who?
answer
Supply= workers
Demand= firms
Demand= firms
question
Similar to perfectly and monopolistically competitive markets, what equation do firms use to maximize their profits in regards to labor?
answer
VMPL = wage rate (or VMPL greater than or equal to wage rate)
question
The equation for the value of marginal product of labor is:
answer
P x MPL
question
What is the difference between micro and macroeconomics?
answer
Microeconomics is the study of particular markets and segments of the economy. Macroeconomics
question
What does GDP stand for and what does it mean?
answer
Gross Domestic Product = the value of all FINISHED goods and services produces WITHIN A COUNTRY'S BORDERS in a specific time period
question
What is the equation for nominal GDP?
answer
(PxQ)+(PxQ)
question
What is the equation for real GDP?
answer
Base year's P x current year's Q
question
What is the equation for GDP per capita?
answer
Nominal GDP/population
Real GDP/population
Real GDP/population
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