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maximize its profit.
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Economists normally assume that the goal of a firm is to
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total revenue
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The amount of money that a firm receives from the sale of its output is called
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$150
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If Danielle sells 300 wrist bands for $0.50 each, her total revenues are
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market value of the inputs a firm uses in production.
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Total cost is the
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total revenue minus total cost.
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Profit is defined as
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$25.
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Marcus sells 300 candy bars at $0.50 each. His total costs are $125. His profits are
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the value of the business owner's time.
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An example of an opportunity cost that is also an implicit cost is
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implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do.
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A difference between explicit and implicit costs is that
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economic profit.
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Total revenue minus both explicit and implicit costs is called
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The firm can vary the number of workers it employs but not the size of its factory.
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Which of these assumptions is often realistic for a firm in the short run?
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labor to be variable and capital to be fixed.
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Suppose that a "doggie day care" firms uses only two inputs: hourly workers (labor) and a building (capital). In the short run, the firm most likely considers
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increase in output obtained from a one unit increase in labor.
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The marginal product of labor is equal to the
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15 bouquets
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Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her husband William to work for her. Together Kate and William can arrange 35 bouquets per day. What is William's marginal product?
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cost of a typical unit of output, if total cost is divided evenly over all the units produced.
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Average total cost tells us the
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$1.10
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Larry's Lunchcart is a small street vendor business. If Larry makes 15 pretzels in his first hour of business and incurs a total cost of $16.50, his average total cost per pretzel is
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the size of a factory is fixed.
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One assumption that distinguishes short-run cost analysis from long-run cost analysis for a profit-maximizing firm is that in the short run,
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Buyers and sellers are price takers.
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Which of the following is a characteristic of a competitive market?
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a one-unit increase in output will increase the firm's profit.
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If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then
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can maintain a price such that total revenues will exceed total costs.
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A monopoly can earn positive profits because it
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not in the best interest of society, one that fails to maximize total economic well-being, inefficient
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Because monopoly firms do not have to compete with other firms, the outcome in a market with a monopoly is often
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barriers to entry.
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The fundamental source of monopoly power is
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government-created monopolies.
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Patent and copyright laws are major sources of
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produces an output level less than the socially optimal level.
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The deadweight loss associated with a monopoly occurs because the monopolist
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Part of the deadweight loss associated with monopoly is measured by the monopolist's economic profit.
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Which of the following statements is not correct?
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