Econ 208 Final - Assignment Essays

question

utility

answer

Consumers are motivated to maximize their utility, the total satisfaction they service from the goods and services they consume

question

total utility

answer

Which is the full satisfaction resulting from the consumption of that product by a summers

question

marginal unit

answer

Is the additional satisfaction resulting from consuming one more unit of that product

question

diminishing marginal unity

answer

the utility that any consumer derives from successive units of a particular product consumed over some period of time diminishes as total consumption of the product increases (holding constant the consumption of all other products)

question

single proprietorship

answer

one owner responsible for all aspects of business (painters, plumbers)

question

ordinary partnership

answer

two or more joint owners who split responsibility (start up business)

question

limited partnership

answer

general partners (run business and in charge of firm's debt) or limited partners (not running business and liable to amount they invest)

question

corporation

answer

having identity of its own, owners are not personally responsible but directors might be, private corporation not traded in stock exchange

question

state-owned enterprise

answer

owned by government but under direction of more/less independent, state-appointed board

question

non-profit organization

answer

providing goods to customers but profits aren't claimed by individuals (YMCA)

question

financial capital

answer

money a firm raises for carrying on it's business (two types are equity and debt)

question

real capital

answer

physical assets of a firm (machinery)

question

dividends

answer

profits paid out to shareholders

question

redemption date

answer

time in which principal needs to be paid

question

term

answer

amount of time between issue of debt and redemption debt

question

principal

answer

repay amount borrowed

question

interest

answer

make some form of extra payment to lender

question

equity

answer

funds provided by owners of firm

question

debt

answer

funds borrowed from credits (individuals or institutions) outside firm

question

significance of productivity growth

answer

"dismal science", predictions of Malthus, why he was wrong (Populations did not expand as quickly as predicted and Technological advancements have increased output

question

AP (average product)

answer

TP/L

question

MP (marginal product)

answer

ΔTP/ΔL

question

TC (total cost)

answer

TFC + TVC

question

ATC (average total cost)

answer

TC/Q or AFC + AVC

question

AFC (average fixed cost)

answer

TFC/Q

question

AVC (average variable cost)

answer

TVC/Q

question

MC (marginal cost)

answer

ΔTC/ΔQ

question

economies of scale

answer

when long run average costs fall as output rises

question

productivity

answer

minimize the average variable cost of production

question

profit formula

answer

total revenue - total cost or (p-ATC) x Q

question

3 aspects of technological change

answer

new techniques, improved inputs, new products

question

firms in the very long run

answer

substitute away or innovate away input (product large profit to account for any risk in invention and innovation)

question

signifiance of productivity growth

answer

"dismal science", predictions of Malthus, wrong for two reasons (populations did not expand as quickly as predicted and Technological advancements have increased output)

question

marginal rate of substitution

answer

the rate at which one factor is substituted for another with output being held constant (measured by slope of isoquant at a certain point)

question

isoquant

answer

firm's alternative methods for producing a given level of output (efficient factor combinations for producing a given level of output)

question

assumptions of a perfect competition

answer

all firms sell homogenous product, consumers know characteristics of products being sold and prices charged by firms, each firm is small relative to the size of the industry, freedom of entry and exit

question

TR (total revenue)

answer

price x output (q)

question

AR (average revenue)

answer

p or p x q/q

question

MR (marginal revenue)

answer

ΔTR/ΔQ

question

For a competitive price-taking firm, the market price is

answer

the firm's marginal (and average) revenue

question

a firm should not produce at all if

answer

TR < TVC or market price < AVC

question

shut-down price

answer

the lowest price a firm can cover its AVC and therefore can produce or not produce (where AVC is at min)

question

supply curve for competitive firm

answer

part of MC curve that's above AC curve

question

short-run equilibrium

answer

when each firm is producing and selling a quantity where marginal cost equals the market price

question

When the industry is in short-run equilibrium, a competitive firm may be

answer

making losses, breaking even, or making profits

question

The long-run equilibrium of a competitive industry occurs when

answer

firms are earning zero profits

question

break-even price

answer

price at which a firm is just able to cover all of its costs, including the opportunity cost of capital

question

For a competitive firm to be maximizing its long-run profits

answer

it must be producing at the minimum point on its LRAC curve

question

TVC (total variable cost)

answer

AVC x Q

question

firm should not produce if

answer

market price is less than AVC

question

If MR > MC

answer

increase output

question

shutdown when

answer

marginal revenue < AVC or p<AVC

question

industry supply curve in perfect competition is

answer

horizontal sum of marginal cost curves

question

LRAC

answer

lowest cost of producing any ouput when all factors are variable

question

SRAC

answer

lowest cost of producing any output when 1 or more factors are fixed

question

diseconomies of scale

answer

increases in cost per unit when output decrease in returns

question

minimum efficient scale (MES)

answer

the lowest level of output at which a firm can minimize long-run average total cost

question

least cost method of producing any ouput is

answer

less labor and more technology

question

perfectly competitive market means

answer

firms have no power in the market

question

demand curve for industry is

answer

negatively sloped

question

firms in perfectly competitive industry have

answer

horizontal demand curve

question

for competitive price-taking firms, market price is

answer

firm's marginal and average revenue

question

firms can maximize profits by

answer

p = MC or MR = MC and p>AVC

question

long run equilibrium occurs when firms earn

answer

0 profit

question

conditions for long run equilibrium

answer

maximizing profits, not suffering losses, not earning profits, not able to increase profits by changing size of production facilities (be at min point of LRAC curve)

question

monopolist demand curve

answer

negative slope

question

marginal revenue for monopolist

answer

less than price so MR curve is below demand curve

question

monopolist produces price __ marginal cost

answer

greater than

question

perfectly competitive firm produces price __ marginal cost

answer

equals

question

profit per unit

answer

revenue - cost for each unit sold

question

total profit

answer

profit per unit x total number of units sold

question

under perfect price discrimination, consumer surplus is

answer

zero since monopolist captured all of surplus

question

perfect price discrimination

answer

firm charges maximum amount that buyers are willing to pay for each unit

question

collusion

answer

firms agree to cooperate to restrict output and raise prices

question

overt, covert, tacit collusion

answer

open, secret, no solid agreement

question

oligopolist compete with each other through

answer

reducing prices to attract customers, non-price competition like advertising, and new products/improvements

question

created barriers from oligopolies

answer

brand proliferation, advertising, predatory pricing, purchasing rival firms

question

3 characteristics of imperfectly competitive firms

answer

firms differentiate products, set prices, engage in non-price competition

question

excess capacity theorem

answer

firms in monopolistic competition produce output where ATC isn't at minimum

question

downward slope demand curve means

answer

some market power and that p>MR

1 of 80

question

utility

answer

Consumers are motivated to maximize their utility, the total satisfaction they service from the goods and services they consume

question

total utility

answer

Which is the full satisfaction resulting from the consumption of that product by a summers

question

marginal unit

answer

Is the additional satisfaction resulting from consuming one more unit of that product

question

diminishing marginal unity

answer

question

single proprietorship

answer

one owner responsible for all aspects of business (painters, plumbers)

question

ordinary partnership

answer

two or more joint owners who split responsibility (start up business)

question

limited partnership

answer

general partners (run business and in charge of firm's debt) or limited partners (not running business and liable to amount they invest)

question

corporation

answer

having identity of its own, owners are not personally responsible but directors might be, private corporation not traded in stock exchange

question

state-owned enterprise

answer

owned by government but under direction of more/less independent, state-appointed board

question

non-profit organization

answer

providing goods to customers but profits aren't claimed by individuals (YMCA)

question

financial capital

answer

money a firm raises for carrying on it's business (two types are equity and debt)

question

real capital

answer

physical assets of a firm (machinery)

question

dividends

answer

profits paid out to shareholders

question

redemption date

answer

time in which principal needs to be paid

question

term

answer

amount of time between issue of debt and redemption debt

question

principal

answer

repay amount borrowed

question

interest

answer

make some form of extra payment to lender

question

equity

answer

funds provided by owners of firm

question

debt

answer

funds borrowed from credits (individuals or institutions) outside firm

question

significance of productivity growth

answer

"dismal science", predictions of Malthus, why he was wrong (Populations did not expand as quickly as predicted and Technological advancements have increased output

question

AP (average product)

answer

TP/L

question

MP (marginal product)

answer

ΔTP/ΔL

question

TC (total cost)

answer

TFC + TVC

question

ATC (average total cost)

answer

TC/Q or AFC + AVC

question

AFC (average fixed cost)

answer

TFC/Q

question

AVC (average variable cost)

answer

TVC/Q

question

MC (marginal cost)

answer

ΔTC/ΔQ

question

economies of scale

answer

when long run average costs fall as output rises

question

productivity

answer

minimize the average variable cost of production

question

profit formula

answer

total revenue - total cost or (p-ATC) x Q

question

3 aspects of technological change

answer

new techniques, improved inputs, new products

question

firms in the very long run

answer

substitute away or innovate away input (product large profit to account for any risk in invention and innovation)

question

signifiance of productivity growth

answer

"dismal science", predictions of Malthus, wrong for two reasons (populations did not expand as quickly as predicted and Technological advancements have increased output)

question

marginal rate of substitution

answer

the rate at which one factor is substituted for another with output being held constant (measured by slope of isoquant at a certain point)

question

isoquant

answer

firm's alternative methods for producing a given level of output (efficient factor combinations for producing a given level of output)

question

assumptions of a perfect competition

answer

question

TR (total revenue)

answer

price x output (q)

question

AR (average revenue)

answer

p or p x q/q

question

MR (marginal revenue)

answer

ΔTR/ΔQ

question

For a competitive price-taking firm, the market price is

answer

the firm's marginal (and average) revenue

question

a firm should not produce at all if

answer

TR < TVC or market price < AVC

question

shut-down price

answer

the lowest price a firm can cover its AVC and therefore can produce or not produce (where AVC is at min)

question

supply curve for competitive firm

answer

part of MC curve that's above AC curve

question

short-run equilibrium

answer

when each firm is producing and selling a quantity where marginal cost equals the market price

question

When the industry is in short-run equilibrium, a competitive firm may be

answer

making losses, breaking even, or making profits

question

The long-run equilibrium of a competitive industry occurs when

answer

firms are earning zero profits

question

break-even price

answer

price at which a firm is just able to cover all of its costs, including the opportunity cost of capital

question

For a competitive firm to be maximizing its long-run profits

answer

it must be producing at the minimum point on its LRAC curve

question

TVC (total variable cost)

answer

AVC x Q

question

firm should not produce if

answer

market price is less than AVC

question

If MR > MC

answer

increase output

question

shutdown when

answer

marginal revenue < AVC or p<AVC

question

industry supply curve in perfect competition is

answer

horizontal sum of marginal cost curves

question

LRAC

answer

lowest cost of producing any ouput when all factors are variable

question

SRAC

answer

lowest cost of producing any output when 1 or more factors are fixed

question

diseconomies of scale

answer

increases in cost per unit when output decrease in returns

question

minimum efficient scale (MES)

answer

the lowest level of output at which a firm can minimize long-run average total cost

question

least cost method of producing any ouput is

answer

less labor and more technology

question

perfectly competitive market means

answer

firms have no power in the market

question

demand curve for industry is

answer

negatively sloped

question

firms in perfectly competitive industry have

answer

horizontal demand curve

question

for competitive price-taking firms, market price is

answer

firm's marginal and average revenue

question

firms can maximize profits by

answer

p = MC or MR = MC and p>AVC

question

long run equilibrium occurs when firms earn

answer

0 profit

question

conditions for long run equilibrium

answer

maximizing profits, not suffering losses, not earning profits, not able to increase profits by changing size of production facilities (be at min point of LRAC curve)

question

monopolist demand curve

answer

negative slope

question

marginal revenue for monopolist

answer

less than price so MR curve is below demand curve

question

monopolist produces price __ marginal cost

answer

greater than

question

perfectly competitive firm produces price __ marginal cost

answer

equals

question

profit per unit

answer

revenue - cost for each unit sold

question

total profit

answer

profit per unit x total number of units sold

question

under perfect price discrimination, consumer surplus is

answer

zero since monopolist captured all of surplus

question

perfect price discrimination

answer

firm charges maximum amount that buyers are willing to pay for each unit

question

collusion

answer

firms agree to cooperate to restrict output and raise prices

question

overt, covert, tacit collusion

answer

open, secret, no solid agreement

question

oligopolist compete with each other through

answer

reducing prices to attract customers, non-price competition like advertising, and new products/improvements

question

created barriers from oligopolies

answer

brand proliferation, advertising, predatory pricing, purchasing rival firms

question

3 characteristics of imperfectly competitive firms

answer

firms differentiate products, set prices, engage in non-price competition

question

excess capacity theorem

answer

firms in monopolistic competition produce output where ATC isn't at minimum

question

downward slope demand curve means

answer

some market power and that p>MR

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order