ECON 3070 Final - Assignment Essays

question

Exogenous vs Endogenous variables

answer

Exogenous is a given variable, while an endogenous variable is determined in the model

question

Constrained optimization

answer

An analytical tool for making the best (optimal) choice, taking into account any possible limitations or restrictions on the choice

question

Objective function

answer

The relationship that a decision maker seeks to maximize or minimize

question

Constraints

answer

The restrictions or limits imposed on a decision maker in a constrained optimization problem

question

Equilibrium

answer

A state or condition that will continue indefinitely as long as factors exogenous to the system remain unchanged

question

Comparative statics

answer

Analysis used to examine how a change in some exogenous variable will affect the level of som endognous variable in an economic system

question

utility function

answer

A function that measures the level of satisfaction a consumer receives from any basket of goods and services

question

marginal utility

answer

The rate at which total utility changes as the level of consumption changes

question

principle of diminishing marginal utility

answer

The principle that after some point, as consumption of a good increases, the marginal utility of that good will begin to fall

question

indifference curve

answer

A curve connecting a set of consumption baskets that yield the same level of satisfaction to the consumer

question

marginal rate of substitution

answer

The rate at which the consumer will give up one good to get more of another, holding the level of utility constant

question

diminishing marginal rate of substitution

answer

A feature of consumer prefrences in which the marginal rate of substitution of one good for another good diminishes as the consumption of the first good increases along an indifference curve

question

perfect substitutes

answer

Two goods such that, the marginal rate of substitution for one good for the other is constant, therefore the indifference curves are straight lines

question

perfect complements

answer

Two goods that the consumer always wants to consume in fixed proportion to each other

question

Cobb-Douglas utility function

answer

A production function of the form U = Ax^ay^b, where A, a, and b are positive constants

question

Budget constraint

answer

The set of baskets that a consumer can purchase with a limited amount of income. All points on or inside the budget line satisfy the budget constraint

question

budget line

answer

The set of baskets that a consumer can purchase when spending all of his or her available income

question

optimal choice

answer

Consumer choice of a basket of goods that (1) maximizes utility while (2) allowing him to live within his budget constraint

question

interior optimum

answer

An optimal basket at which a consumer will be purchasing positive amounts of all commodities

question

Price consumption curve

answer

The set of utility-maximizing baskets as the price of one good varies (holding constant income and the prices for other goods)

question

income consumption curve

answer

The set of utility maximizing baskets as income varies (and prices are held constant)

question

Engel curve

answer

A curve that relates the amount of a commodity purchased to the level of income, holding costant the prices of all goods

question

Normal good

answer

A good that a consumer purchases more of as income rises

question

inferior good

answer

A good that a consumer purchases less of as income rises

question

substitution effect

answer

The change in the amount of a good that would be consumed as the price of that good changes, holding constant all other prices and the level of utility

question

income effect

answer

The change in the amount of a good that a consumer would buy as purchasing power changes, holding all prices constant

question

Market demand

answer

The quantity of goods that conumers are willing to buy at different prices

question

Network externality

answer

A deman characteristic present when the amount of a good demanded by one consumer depends on the number of other conumers who purchase the good

question

Bandwagon effect

answer

A positive network externality that referes to the increase in each consumer's demand as more consumers buy the good

question

Snob effect

answer

A negative network externality that refers to the decrease in each consumer's demand as more consumers buy the good

question

inputs

answer

Resources, such as labor, capital equipment, and raw materials, that are combined to produce finished goods

question

outputs

answer

The amount of a good or service produced by a firm

question

production function

answer

A mathematical representation that shows the maximum quantity of output a firm can produce given the quantities of inputs that it might employ

question

total production function

answer

A single input shows how total output depends on the level of input

question

marginal product of labor

answer

The rate at which total output changes as the quanitity of labor the firm uses is unchanged

question

law of diminishing marginal returns

answer

Principle that as the usage of one input increases, the quantities of other inputs being held fixed, a point will be reached beyond which the marginal product of the variable input will decrease

question

average product of labor

answer

The average amount of output per unit of labor

question

isoquant

answer

A curve that shows all of the combinations of labor and capital that can produce a given level of output

question

marginal rate of technical substitution

answer

The rate at which the quantity of capital can be reduced for every one unit increase in the quantity of labor, holding the quantity of output constant

question

explicit and implicit costs

answer

Explicit - costs that involve a direct monetary outlay. Implicit is the opposite

question

opportunity cost

answer

The value of the next-best alternative that is foregone when another alternative is chosen

question

economic costs

answer

The sum of the firm's expliit costs and implicit costs

question

accounting costs

answer

The total of explicit costs that have been incurred in the past

question

sunk costs

answer

Costs that have already been incurred and cannot be recovered

question

nonsunk costs

answer

Costs that incurred only if a particular decision is made

question

long run

answer

The period of time long enough for the firm to vary the quantities of all inputs as much as it desires

question

short run

answer

The period of time in which at least one of the firm's input quantities cannot be changed

question

cost minimization problem

answer

The problem of finding the input combination that minimizes a firm's total cost of producing a given amount of output

question

cost-minimizing firm

answer

A firm that seeks to minimize the cost of producing a given amount of output

question

isocost line

answer

The set of combinations of labor and capital that yield the same total cost for the firm

question

expansion path

answer

A line that connects the cost-minimizing input combinations as the quantity of output, Q, varies, holding input prices constant

question

normal and inferior inputs

answer

Normal - An input whose cost-minimizing quanitty increases as the firm produces more output. Inferior - the opposite

question

Long-run total cost curve

answer

A curve that shows how total cost varies with output, holding input prices fixed and choosing all inputs to minimize cost

question

Long-run average cost

answer

The firm's total cost per unit of output

question

Long-run marginal cost

answer

The rate at which long-run total cost changes as the level of output changes

question

MES

answer

Minimum efficient scale. The smallest quantity at which the long-run average cost curve attains its minimum point

question

(dis)economies of scale

answer

A characteristic of production in which average cost decreases as output goes up

question

STC

answer

Short-run total cost: a curve that shows the minimizsed total cost of producing a given quantity of output when at least one input is fixed

question

TVC

answer

Total variable cost: the sum of expenditures on variable inputs, such as labor and materials, at the short-run cost-minimizing input combination

question

TFC

answer

Total fixed cost: the cost of fixed inputs, does not vary with output

question

SAV

answer

Short-run Average Cost, the firm's total cost per unit of output when it has one or more fixed inputs

question

AVC

answer

Total variable cost per unit of output

question

AFC

answer

Total fixed cost per unit of output

question

SMC

answer

The slope of the short-run total cost curve

question

economies of scope

answer

A production characteristic in which the total cost of producing given quantities of two goods in the same firm is less than the total cost of producing those quantities in two single-product firms

question

stand-alone cost

answer

The cost of producing a good in a single-product firm

question

economies of experience

answer

Cost advantages that result from accumulated experience, or as it is sometimes called, learning-by-doing

question

experience curve

answer

A relationship between average variable cost and cummulative production volume. Describes economies of experience

question

Short-run market supply curve

answer

The supply curve hat shows the quantity supplied in the aggregate by all firms in the market for each possible market price when the number of firms in the industry is fixed

question

Long-run supply curve

answer

The supply curve after firms can fully adjust their supply decisions to changes in price

question

long-run perfectly competitive equilibrium

answer

The market price and quantity at which supply equals demand, established firms have no incentive to exit and prospective firms have no incentive to enter (no economic profit)

question

producer surplus

answer

A measure of the monetary benefit that producers derive from producing a good at a particular price

question

profit maximization condition

answer

Producing a quantity at which marginal revenue equals marginal cost

question

average revenue

answer

Total revenue per unit of output

1 of 74

question

Exogenous vs Endogenous variables

answer

Exogenous is a given variable, while an endogenous variable is determined in the model

question

Constrained optimization

answer

An analytical tool for making the best (optimal) choice, taking into account any possible limitations or restrictions on the choice

question

Objective function

answer

The relationship that a decision maker seeks to maximize or minimize

question

Constraints

answer

The restrictions or limits imposed on a decision maker in a constrained optimization problem

question

Equilibrium

answer

A state or condition that will continue indefinitely as long as factors exogenous to the system remain unchanged

question

Comparative statics

answer

Analysis used to examine how a change in some exogenous variable will affect the level of som endognous variable in an economic system

question

utility function

answer

A function that measures the level of satisfaction a consumer receives from any basket of goods and services

question

marginal utility

answer

The rate at which total utility changes as the level of consumption changes

question

principle of diminishing marginal utility

answer

The principle that after some point, as consumption of a good increases, the marginal utility of that good will begin to fall

question

indifference curve

answer

A curve connecting a set of consumption baskets that yield the same level of satisfaction to the consumer

question

marginal rate of substitution

answer

The rate at which the consumer will give up one good to get more of another, holding the level of utility constant

question

diminishing marginal rate of substitution

answer

A feature of consumer prefrences in which the marginal rate of substitution of one good for another good diminishes as the consumption of the first good increases along an indifference curve

question

perfect substitutes

answer

Two goods such that, the marginal rate of substitution for one good for the other is constant, therefore the indifference curves are straight lines

question

perfect complements

answer

Two goods that the consumer always wants to consume in fixed proportion to each other

question

Cobb-Douglas utility function

answer

A production function of the form U = Ax^ay^b, where A, a, and b are positive constants

question

Budget constraint

answer

The set of baskets that a consumer can purchase with a limited amount of income. All points on or inside the budget line satisfy the budget constraint

question

budget line

answer

The set of baskets that a consumer can purchase when spending all of his or her available income

question

optimal choice

answer

Consumer choice of a basket of goods that (1) maximizes utility while (2) allowing him to live within his budget constraint

question

interior optimum

answer

An optimal basket at which a consumer will be purchasing positive amounts of all commodities

question

Price consumption curve

answer

The set of utility-maximizing baskets as the price of one good varies (holding constant income and the prices for other goods)

question

income consumption curve

answer

The set of utility maximizing baskets as income varies (and prices are held constant)

question

Engel curve

answer

A curve that relates the amount of a commodity purchased to the level of income, holding costant the prices of all goods

question

Normal good

answer

A good that a consumer purchases more of as income rises

question

inferior good

answer

A good that a consumer purchases less of as income rises

question

substitution effect

answer

The change in the amount of a good that would be consumed as the price of that good changes, holding constant all other prices and the level of utility

question

income effect

answer

The change in the amount of a good that a consumer would buy as purchasing power changes, holding all prices constant

question

Market demand

answer

The quantity of goods that conumers are willing to buy at different prices

question

Network externality

answer

A deman characteristic present when the amount of a good demanded by one consumer depends on the number of other conumers who purchase the good

question

Bandwagon effect

answer

A positive network externality that referes to the increase in each consumer's demand as more consumers buy the good

question

Snob effect

answer

A negative network externality that refers to the decrease in each consumer's demand as more consumers buy the good

question

inputs

answer

Resources, such as labor, capital equipment, and raw materials, that are combined to produce finished goods

question

outputs

answer

The amount of a good or service produced by a firm

question

production function

answer

A mathematical representation that shows the maximum quantity of output a firm can produce given the quantities of inputs that it might employ

question

total production function

answer

A single input shows how total output depends on the level of input

question

marginal product of labor

answer

The rate at which total output changes as the quanitity of labor the firm uses is unchanged

question

law of diminishing marginal returns

answer

Principle that as the usage of one input increases, the quantities of other inputs being held fixed, a point will be reached beyond which the marginal product of the variable input will decrease

question

average product of labor

answer

The average amount of output per unit of labor

question

isoquant

answer

A curve that shows all of the combinations of labor and capital that can produce a given level of output

question

marginal rate of technical substitution

answer

The rate at which the quantity of capital can be reduced for every one unit increase in the quantity of labor, holding the quantity of output constant

question

explicit and implicit costs

answer

Explicit - costs that involve a direct monetary outlay. Implicit is the opposite

question

opportunity cost

answer

The value of the next-best alternative that is foregone when another alternative is chosen

question

economic costs

answer

The sum of the firm's expliit costs and implicit costs

question

accounting costs

answer

The total of explicit costs that have been incurred in the past

question

sunk costs

answer

Costs that have already been incurred and cannot be recovered

question

nonsunk costs

answer

Costs that incurred only if a particular decision is made

question

long run

answer

The period of time long enough for the firm to vary the quantities of all inputs as much as it desires

question

short run

answer

The period of time in which at least one of the firm's input quantities cannot be changed

question

cost minimization problem

answer

The problem of finding the input combination that minimizes a firm's total cost of producing a given amount of output

question

cost-minimizing firm

answer

A firm that seeks to minimize the cost of producing a given amount of output

question

isocost line

answer

The set of combinations of labor and capital that yield the same total cost for the firm

question

expansion path

answer

A line that connects the cost-minimizing input combinations as the quantity of output, Q, varies, holding input prices constant

question

normal and inferior inputs

answer

Normal - An input whose cost-minimizing quanitty increases as the firm produces more output. Inferior - the opposite

question

Long-run total cost curve

answer

A curve that shows how total cost varies with output, holding input prices fixed and choosing all inputs to minimize cost

question

Long-run average cost

answer

The firm's total cost per unit of output

question

Long-run marginal cost

answer

The rate at which long-run total cost changes as the level of output changes

question

MES

answer

Minimum efficient scale. The smallest quantity at which the long-run average cost curve attains its minimum point

question

(dis)economies of scale

answer

A characteristic of production in which average cost decreases as output goes up

question

STC

answer

Short-run total cost: a curve that shows the minimizsed total cost of producing a given quantity of output when at least one input is fixed

question

TVC

answer

Total variable cost: the sum of expenditures on variable inputs, such as labor and materials, at the short-run cost-minimizing input combination

question

TFC

answer

Total fixed cost: the cost of fixed inputs, does not vary with output

question

SAV

answer

Short-run Average Cost, the firm's total cost per unit of output when it has one or more fixed inputs

question

AVC

answer

Total variable cost per unit of output

question

AFC

answer

Total fixed cost per unit of output

question

SMC

answer

The slope of the short-run total cost curve

question

economies of scope

answer

A production characteristic in which the total cost of producing given quantities of two goods in the same firm is less than the total cost of producing those quantities in two single-product firms

question

stand-alone cost

answer

The cost of producing a good in a single-product firm

question

economies of experience

answer

Cost advantages that result from accumulated experience, or as it is sometimes called, learning-by-doing

question

experience curve

answer

A relationship between average variable cost and cummulative production volume. Describes economies of experience

question

Short-run market supply curve

answer

The supply curve hat shows the quantity supplied in the aggregate by all firms in the market for each possible market price when the number of firms in the industry is fixed

question

Long-run supply curve

answer

The supply curve after firms can fully adjust their supply decisions to changes in price

question

long-run perfectly competitive equilibrium

answer

The market price and quantity at which supply equals demand, established firms have no incentive to exit and prospective firms have no incentive to enter (no economic profit)

question

producer surplus

answer

A measure of the monetary benefit that producers derive from producing a good at a particular price

question

profit maximization condition

answer

Producing a quantity at which marginal revenue equals marginal cost

question

average revenue

answer

Total revenue per unit of output

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order