ECON 302 Midterm 2

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March 14th, 2023

question

Production Function

answer

A function that shows the maximum quantity of output that a firm can produce with given quantities of inputs

question

Marginal Rate Technical Substitution

answer

The rate at which the firm can decrease Y for a small increase in X while keeping output the same

question

Increasing returns to scale

answer

A type of production function where increasing all inputs by a fixed percentage increases output by more than that percentage

question

Labor-saving technological progress

answer

A charge in the production function that makes the firm more productive and increases the marginal product of capital relative to the marginal product of labor

question

Economic Cost

answer

The full opportunity cost of making a decision or producing output including both implicit and explicit costs

question

Cost minimization problem

answer

The problem of finding the input combination that produces a given amount of output at the lowest possible cost, given a fixed production function and fixed input prices

question

Total cost curve

answer

A graph that shows how the cost of production varies with quantity of output

question

Economies of scale

answer

Average costs decrease as output increases

question

Short run

answer

A period of time in which the level of at least one of the firms inputs cannot be changed

question

Monopoly

answer

A market where there is only one seller

question

Monopsony

answer

A market in which there is only one buyer

question

Barrier to entry

answer

A factor that allows a firm to enjoy monopoly power while preventing rivals from profitably entering the market

question

First degree price discrimination

answer

Pricing each unit of a good sold to each consumer at exactly that consumer's maximum willingness to pay

question

Second degree price discrimination

answer

Charging different prices per unit of a good depending on how much a consumer has already purchased

question

Third degree price discrimination

answer

Charging different prices to different consumer groups or segments in a market

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question

Production Function

answer

A function that shows the maximum quantity of output that a firm can produce with given quantities of inputs

question

Marginal Rate Technical Substitution

answer

The rate at which the firm can decrease Y for a small increase in X while keeping output the same

question

Increasing returns to scale

answer

A type of production function where increasing all inputs by a fixed percentage increases output by more than that percentage

question

Labor-saving technological progress

answer

A charge in the production function that makes the firm more productive and increases the marginal product of capital relative to the marginal product of labor

question

Economic Cost

answer

The full opportunity cost of making a decision or producing output including both implicit and explicit costs

question

Cost minimization problem

answer

The problem of finding the input combination that produces a given amount of output at the lowest possible cost, given a fixed production function and fixed input prices

question

Total cost curve

answer

A graph that shows how the cost of production varies with quantity of output

question

Economies of scale

answer

Average costs decrease as output increases

question

Short run

answer

A period of time in which the level of at least one of the firms inputs cannot be changed

question

Monopoly

answer

A market where there is only one seller

question

Monopsony

answer

A market in which there is only one buyer

question

Barrier to entry

answer

A factor that allows a firm to enjoy monopoly power while preventing rivals from profitably entering the market

question

First degree price discrimination

answer

Pricing each unit of a good sold to each consumer at exactly that consumer's maximum willingness to pay

question

Second degree price discrimination

answer

Charging different prices per unit of a good depending on how much a consumer has already purchased

question

Third degree price discrimination

answer

Charging different prices to different consumer groups or segments in a market

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