Economics 1021: Chapter 8-11 - Assignment Essays

question

Consumption possibilities

answer

all the things that you can afford to buy.

question

Utility

answer

benefit or satisfaction from consuming a good or service

question

Total Utility

answer

is the total benefit a person gets from the consumption of goods. Generally, more consumption gives more total utility.

question

Marginal Utility

answer

is the increase in total utility that results from consuming one more unit of the good.

question

Diminishing Marginal Utility

answer

the decrease in marginal utility as the quantity of the good consumed increases

question

Marginal Utility per Dollar

answer

the marginal utility from a good that results from spending one more dollar on it

question

Behavioural Economics

answer

studies the ways in which limits on the human brain's ability to compute and implement rational decisions influence economic behaviour...
...both the decisions that people make and the consequences of those decisions for the way markets work.

question

Bounded Rationality

answer

is rationality that is bounded by the computing power of the human brain

question

Bounded Willpower

answer

is the less-than-perfect willpower that prevents us from making a decision that we know, at the time of implementing the decision, we will later regret

question

Bounded self-interest

answer

is the limited self-interest that sometimes results in suppressing our own interests to help others

question

The endowment effect

answer

is the tendency for people to value something more highly simply because they own it

question

Neuroeconomics

answer

is the study of the activity of the human brain when a person makes an economic decision

question

Budget line

answer

describes the limits to the household's consumption choices

question

Indifference curve

answer

is a line that shows combinations of goods among which a consumer is indifferent.

question

Marginal rate of substitution

answer

measures the rate at which a person is willing to give up good y to get an additional unit of good x while at the same time remain indifferent (remain on the same indifference curve).
The magnitude of the slope of the indifference curve measures the marginal rate of substitution.

question

Diminishing marginal rate of substitution

answer

is a general tendency for a person to be willing to give up less of good y to get one more unit of good x, while at the same time remaining indifferent as the quantity of good x increases.

question

Price effect

answer

The effect of a change in the price of a good on the quantity of the good consumed

question

Income effect

answer

The effect of a change in income on the quantity of a good consumed

question

Substitution effect

answer

is the effect of a change in price on the quantity bought when the consumer remains on the same indifferent curve.

question

Firm

answer

an institution that hires factors of production and organizes them to produce and sell goods and services.

question

Economic Profit

answer

is equal to total revenue minus total cost, with total cost measured as the opportunity cost of production.

question

Implicit rental rate

answer

the firm's opportunity cost of using the capital it owns

question

Economic depreciation

answer

is the change in the market value of capital over a given period.

question

Normal profit

answer

The profit that an entrepreneur can expect to receive on average

question

Short run

answer

a time frame in which the quantity of one or more resources used in production is fixed

question

Long run

answer

a time frame in which the quantities of all resources—including the plant size—can be varied

question

Sunk cost

answer

a cost incurred by the firm and cannot be changed.

question

Total product

answer

is the total output produced in a given period

question

Marginal product

answer

labour is the change in total product that results from a one-unit increase in the quantity of labour employed, with all other inputs remaining the same

question

Average product

answer

equal to total product divided by the quantity of labour employed

question

Law of diminishing returns

answer

As a firm uses more of a variable input with a given quantity of fixed inputs, the marginal product of the variable input eventually diminishes

question

Total cost

answer

is the cost of all resources used

question

Total fixed cost

answer

the cost of the firm's fixed inputs. Fixed costs do not change with output

question

Total variable cost

answer

the cost of the firm's variable inputs. Variable costs do change with output

question

Marginal cost

answer

the increase in total cost that results from a one-unit increase in total product

question

Average fixed cost

answer

total fixed cost per unit of output.

question

Average variable cost

answer

is total variable cost per unit of output

question

Average total cost

answer

total cost per unit of output

question

Long-run average cost curve

answer

the relationship between the lowest attainable average total cost and output when both the plant and labour are varied

question

Economies of scale

answer

are features of a firm's technology that lead to falling long-run average cost as output increases

question

Diseconomies of scale

answer

features of a firm's technology that lead to rising long-run average cost as output increases

question

Constant returns to scale

answer

features of a firm's technology that lead to constant long-run average cost as output increases.

question

Minimum efficient scale

answer

the smallest quantity of output at which the long-run average cost reaches its lowest level

question

Price taker

answer

price taker is a firm that cannot influence the price of a good or service

question

Marginal revenue

answer

the change in total revenue that results from a one-unit increase in the quantity sold

question

Shutdown point

answer

the price and quantity at which it is indifferent between producing the profit-maximizing quantity and shutting down.

question

Short-run market supply curve

answer

shows the quantity supplied by all firms in the market at each price when each firm's plant and the number of firms remain the same

1 of 47

question

Consumption possibilities

answer

all the things that you can afford to buy.

question

Utility

answer

benefit or satisfaction from consuming a good or service

question

Total Utility

answer

is the total benefit a person gets from the consumption of goods. Generally, more consumption gives more total utility.

question

Marginal Utility

answer

is the increase in total utility that results from consuming one more unit of the good.

question

Diminishing Marginal Utility

answer

the decrease in marginal utility as the quantity of the good consumed increases

question

Marginal Utility per Dollar

answer

the marginal utility from a good that results from spending one more dollar on it

question

Behavioural Economics

answer

question

Bounded Rationality

answer

is rationality that is bounded by the computing power of the human brain

question

Bounded Willpower

answer

is the less-than-perfect willpower that prevents us from making a decision that we know, at the time of implementing the decision, we will later regret

question

Bounded self-interest

answer

is the limited self-interest that sometimes results in suppressing our own interests to help others

question

The endowment effect

answer

is the tendency for people to value something more highly simply because they own it

question

Neuroeconomics

answer

is the study of the activity of the human brain when a person makes an economic decision

question

Budget line

answer

describes the limits to the household's consumption choices

question

Indifference curve

answer

is a line that shows combinations of goods among which a consumer is indifferent.

question

Marginal rate of substitution

answer

question

Diminishing marginal rate of substitution

answer

is a general tendency for a person to be willing to give up less of good y to get one more unit of good x, while at the same time remaining indifferent as the quantity of good x increases.

question

Price effect

answer

The effect of a change in the price of a good on the quantity of the good consumed

question

Income effect

answer

The effect of a change in income on the quantity of a good consumed

question

Substitution effect

answer

is the effect of a change in price on the quantity bought when the consumer remains on the same indifferent curve.

question

Firm

answer

an institution that hires factors of production and organizes them to produce and sell goods and services.

question

Economic Profit

answer

is equal to total revenue minus total cost, with total cost measured as the opportunity cost of production.

question

Implicit rental rate

answer

the firm's opportunity cost of using the capital it owns

question

Economic depreciation

answer

is the change in the market value of capital over a given period.

question

Normal profit

answer

The profit that an entrepreneur can expect to receive on average

question

Short run

answer

a time frame in which the quantity of one or more resources used in production is fixed

question

Long run

answer

a time frame in which the quantities of all resources—including the plant size—can be varied

question

Sunk cost

answer

a cost incurred by the firm and cannot be changed.

question

Total product

answer

is the total output produced in a given period

question

Marginal product

answer

labour is the change in total product that results from a one-unit increase in the quantity of labour employed, with all other inputs remaining the same

question

Average product

answer

equal to total product divided by the quantity of labour employed

question

Law of diminishing returns

answer

As a firm uses more of a variable input with a given quantity of fixed inputs, the marginal product of the variable input eventually diminishes

question

Total cost

answer

is the cost of all resources used

question

Total fixed cost

answer

the cost of the firm's fixed inputs. Fixed costs do not change with output

question

Total variable cost

answer

the cost of the firm's variable inputs. Variable costs do change with output

question

Marginal cost

answer

the increase in total cost that results from a one-unit increase in total product

question

Average fixed cost

answer

total fixed cost per unit of output.

question

Average variable cost

answer

is total variable cost per unit of output

question

Average total cost

answer

total cost per unit of output

question

Long-run average cost curve

answer

the relationship between the lowest attainable average total cost and output when both the plant and labour are varied

question

Economies of scale

answer

are features of a firm's technology that lead to falling long-run average cost as output increases

question

Diseconomies of scale

answer

features of a firm's technology that lead to rising long-run average cost as output increases

question

Constant returns to scale

answer

features of a firm's technology that lead to constant long-run average cost as output increases.

question

Minimum efficient scale

answer

the smallest quantity of output at which the long-run average cost reaches its lowest level

question

Price taker

answer

price taker is a firm that cannot influence the price of a good or service

question

Marginal revenue

answer

the change in total revenue that results from a one-unit increase in the quantity sold

question

Shutdown point

answer

the price and quantity at which it is indifferent between producing the profit-maximizing quantity and shutting down.

question

Short-run market supply curve

answer

shows the quantity supplied by all firms in the market at each price when each firm's plant and the number of firms remain the same

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