question
How do you calculate the HHI?
answer
square and then sum the market shares of the 50 largest firms
question
How do you find the 4-firm concentration ratio?
answer
sum the market prices of the 4 largest firms
question
a more concentrated industry is a ________________ competitive one
answer
less
question
How to calculate Marginal Product of Labor
answer
change in Q/ change in L
question
What is Marginal Product of Labor
answer
the additional amount of output produced by 1 more worker
question
How to calculate Average Product of Labor
answer
Q/L
question
What is the law of diminishing returns?
answer
at some point, one additional unit causes the Marginal product of labor to decrease.
question
In the Short run ________ _____________. In the long run, all inputs are ____________
answer
at least input is fixed, variable
question
Diseconomies of scale is characterized by____________________________
answer
an increase in Q and an increase in TC
question
If the MC of production > ATC then ______________
answer
MC > AVC
question
If MC of production < ATC then _____________________
answer
MC < AVC
question
When a firm satisfies production efficiency, _____________
answer
the firm is experiencing constant returns to scale
question
What defines economies of scale
answer
the long run average cost decreases as the quantity increases
question
what defines diseconomies of scale
answer
the long run average cost increases as the quantity increases
question
what defines constant returns to scale
answer
the long run average cost is at its minimum point
question
If the price ceiling is lower than allocative efficiency there is a _________
answer
shortage
question
If the price ceiling is higher than allocative efficiency there is a _________
answer
nothing
question
if the price floor is lower than allocative efficiency there is a ____________
answer
surplus
question
if the price floor is higher than allocative efficiency there is a _________
answer
nothing
question
Underproduction occurs when
answer
The MB of the last product produced is > the MC of the last product produced
question
What is the formula for profit
answer
pi = q(P-ATC)
question
If TR> VC or P > AVC, ______________
answer
increase production
question
If TR< VC or P < AVC, then _______
answer
shut down
question
The shut down point is when ___________
answer
p=AVC and TR=VC
question
Production efficiency is when you ___________ and it is located at __________
answer
produce at the lowest possible cost, minimum ATC
question
If pi > 0 then, ________
answer
new firms will enter the market
question
if pi < 0 then, ___________
answer
existing firms start to shut down
question
Does a price floor create a shortage or a surplus?
answer
surplus
question
does a price ceiling create a shortage or a surplus?
answer
shortage
question
What is the formula for MC?
answer
MC= change in TC/ change in Q
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