question
average total cost
answer
what it costs to produce each unit on average TC/Q
question
average variable cost
answer
what it costs to produce each unit on average in terms of the variable input costs on average
question
marginal costs
answer
how much it costs to produce an additional unit
question
marginal revenue
answer
the change in revenue from selling one more unit
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perfect competition
answer
a market structure with many buyers and sellers who are all price takers, produce a homogenous product, have perfect information, and face no barriers to entry or exit
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shut down price
answer
The price where average revenue is equal to average variable cost. Below this price, the firm will shut down in the short run
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cost-competitive industry
answer
a competitive industry where as entry occurs, exit stays constant
question
increasing cost-competitive industry
answer
a competitive industry where as entry occurs faster, exit increases
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decreasing cost-competitive industry
answer
a competitive industry where as entry occurs faster, exit decreases
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monopoly
answer
a market structure where there is a single firm producing a unique product, imperfect information, and barriers to entry
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barrier to entry
answer
legal or technical reasons which prevent firms from entering a market
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natural monopoly
answer
a market where demand is insufficient to support more than one firm
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economies of scope
answer
when the costs of producing two goods together is less than the costs of producing them separately (i.e. chicken and steak dinners)
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cost complementaries
answer
as you produce more of 1 good, the marginal costs of the other goods decreases
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optimal price of a good
answer
the price at which the seller's profits are maximized
question
monopolisitc competition
answer
many buyer and sellers, a slightly differentiated product, free entry and exit, and perfect information
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sweazy oligopoly
answer
oligopoly where firms believe rivals will match price decreases but not price increases
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cournot oligopoly
answer
oligopoly where each firm believes its rival will keep its output constant as it changes its own output
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Stackleberg oligopoly
answer
oligopoly where the leader uses the fringe's reaction function to choose its profit max level of output
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monopsony
answer
a single buyer in a market
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average product
answer
Q/L where the amount of output produced on average is by a specific type of input
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marginal product
answer
the additional output produced by an additional unit of an input
question
variable market product (VMP)
answer
the benefit a firm receives from hiring an additional input = MPx price of the output
question
marginal revenue product (MRP)
answer
the benefit a firm receives from hiring an additional input MR*MP
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isoquant
answer
the various combination of 2 inputs that can produce a given amount of output
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marginal rate of technical substitution
answer
the amount of 1 input that has to be given up to use 1 more of a different input, keeping output constant
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increasing returns to scale
answer
a 1% increase in all inputs results in a more than 1% increase in output
question
constant returns to scale
answer
a 1% increase in all inputs results in a 1% increase in output
question
decreasing returns to scale
answer
a 1% increase in all inputs results in a less than 1% increase in output
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