Micro- Unit 3 - Assignment Essays

question

Marginal Product

answer

change in TP/change in inputs

question

average product

answer

TP/units of labor

question

fixed resources

answer

variables that don't change with the quantity produced

question

variable resources

answer

resources that do change with the quantity produced

question

Law of Diminishing Marginal Returns

answer

As variable resources (workers) are added to fixed resources (ovens, machinery, tool, etc.), the additional output produced from each additional worker will eventually fall.

question

Stage 1 of returns

answer

increasing marginal returns

question

stage 2 of returns

answer

decreasing returns

question

stage 3 of returns

answer

negative returns

question

short run

answer

atleast one resource is fixed and cannot be changed

question

long run

answer

all resources are variable and can be changed

question

AFC=

answer

FC/Q

question

AVC=

answer

VC/Q

question

ATC=

answer

TC/Q

question

FC+VC=

answer

question

AFC+AVC=

answer

ATC

question

MC=

answer

change in TC/change in Q

question

Difference between ATC and AVC represents

answer

AFC

question

MC intersects ATC and AVC at

answer

their lowest points

question

If you double all your inputs and your output more than doubles then you have

answer

increasing returns to scale

question

If you double all your inputs and your output doubles then you have

answer

constant returns to scale

question

If you double all your inputs and your output less than doubles

answer

decreasing returns to scale

question

economies of scale and mass production techniques

answer

factories will specialize and produce in bulk to create a lower per unit cost

question

stage 1 of long run average total cost

answer

1: economies of scale
curve is decreasing (mass production techniques are being used and specialization)

question

Total revenue=

answer

Price x Quantity

question

profit=

answer

total revenue - total cost

question

accountants look at

answer

explicit/out of pocket costs

question

economists look at

answer

both implicit and explicit costs

question

economic profit=

answer

total revenue - explicit costs - implicit costs

question

Accountant Profit=

answer

total revenue- explicit costs

question

profit maximization rule

answer

MR=MC
(marginal revenue=marginal costs)

question

MR=

answer

$ per unit
how much each unit is being sold for

question

The shut down rule (SHORT RUN)

answer

a firm should shut down if the price falls below the AVC
(when loss > fixed cost, they should shut down)

question

MC above AVC is the...

answer

short run supply curve

question

When MC increases, supply...

answer

decreases

question

when MC decreases, supply...

answer

increases

question

when do people enter a market

answer

when the industry is profitable

question

normal profit

answer

economic profit equal to zero
Total revenue=Total cost

question

what composes long run ATC

answer

connecting the minimum points of the short run ATCs, because you want to optimize your fixed costs

question

Stage 2 of long run average total cost

answer

constant returns to scale where curve is horizontal line

question

Stage 3 of long run average total cost

answer

diseconomies of scale where curve is increasing
(expanded too much, making company difficult to manage)

question

characteristics of perfect competition

answer

-many small firms
- identical products (perfect substitutes)
- low barriers to entry
- seller has no need to advertise
- "Price takers" (no advantage to having a higher price because nobody will buy from you)

question

when do you shut down in long run

answer

when price falls below ATC

question

demand elasticity of perfect competition

answer

perfectly elastic

question

MR. DARP

answer

Marginal Revenue = Demand = Average Revenue = Price

question

what does curve look like in perfect competition when they have $0 economic profit

answer

minimum ATC intersects at MR. DARP

question

MC=MR applies to _____ market structures

answer

all

question

when does the MR=MC rule only apply

answer

when price is above AVC

question

a change in fixed costs changes

answer

ATC and AFC (does NOT change Q produced)

question

a change in variable costs changes

answer

MC, ATC, and AVC (CHANGES Q PRODUCED)

question

changes in fixed costs DO NOT change _____ and just changes _______

answer

output; profit

question

changes in variable costs change ______

answer

output/Q produced

question

per unit tax is paired with a change in

answer

variable costs

question

lump sum tax is paired with a change in

answer

fixed costs

question

productive efficiency

answer

producing at the lowest possible cost
where P=min ATC on graph

question

allocative efficiency

answer

producing at the amount most desired by society
where P=MC

question

constant cost industry

answer

new firms entering the market does not increase the costs for the firms already in the market

question

in a constant cost industry, the long run supply is

answer

horizontal

question

increasing cost industry

answer

New firms entering the market increase the costs for the firms already in the market

question

in an increasing cost industry the supply is

answer

upward sloping

question

in the long run, firms are always ______ efficient

answer

productively and allocatively

question

in the short run, firms are always _________ efficient

answer

allocatively

question

firms will always _____ in the long run

answer

break even

question

if price is above the ATC, the business is running at a

answer

profit

question

if price is below the ATC, the business is running at a

answer

loss

1 of 64

question

Marginal Product

answer

change in TP/change in inputs

question

average product

answer

TP/units of labor

question

fixed resources

answer

variables that don't change with the quantity produced

question

variable resources

answer

resources that do change with the quantity produced

question

Law of Diminishing Marginal Returns

answer

As variable resources (workers) are added to fixed resources (ovens, machinery, tool, etc.), the additional output produced from each additional worker will eventually fall.

question

Stage 1 of returns

answer

increasing marginal returns

question

stage 2 of returns

answer

decreasing returns

question

stage 3 of returns

answer

negative returns

question

short run

answer

atleast one resource is fixed and cannot be changed

question

long run

answer

all resources are variable and can be changed

question

AFC=

answer

FC/Q

question

AVC=

answer

VC/Q

question

ATC=

answer

TC/Q

question

FC+VC=

answer

question

AFC+AVC=

answer

ATC

question

MC=

answer

change in TC/change in Q

question

Difference between ATC and AVC represents

answer

AFC

question

MC intersects ATC and AVC at

answer

their lowest points

question

If you double all your inputs and your output more than doubles then you have

answer

increasing returns to scale

question

If you double all your inputs and your output doubles then you have

answer

constant returns to scale

question

If you double all your inputs and your output less than doubles

answer

decreasing returns to scale

question

economies of scale and mass production techniques

answer

factories will specialize and produce in bulk to create a lower per unit cost

question

stage 1 of long run average total cost

answer

1: economies of scale
curve is decreasing (mass production techniques are being used and specialization)

question

Total revenue=

answer

Price x Quantity

question

profit=

answer

total revenue - total cost

question

accountants look at

answer

explicit/out of pocket costs

question

economists look at

answer

both implicit and explicit costs

question

economic profit=

answer

total revenue - explicit costs - implicit costs

question

Accountant Profit=

answer

total revenue- explicit costs

question

profit maximization rule

answer

MR=MC
(marginal revenue=marginal costs)

question

MR=

answer

$ per unit
how much each unit is being sold for

question

The shut down rule (SHORT RUN)

answer

a firm should shut down if the price falls below the AVC
(when loss > fixed cost, they should shut down)

question

MC above AVC is the...

answer

short run supply curve

question

When MC increases, supply...

answer

decreases

question

when MC decreases, supply...

answer

increases

question

when do people enter a market

answer

when the industry is profitable

question

normal profit

answer

economic profit equal to zero
Total revenue=Total cost

question

what composes long run ATC

answer

connecting the minimum points of the short run ATCs, because you want to optimize your fixed costs

question

Stage 2 of long run average total cost

answer

constant returns to scale where curve is horizontal line

question

Stage 3 of long run average total cost

answer

diseconomies of scale where curve is increasing
(expanded too much, making company difficult to manage)

question

characteristics of perfect competition

answer

question

when do you shut down in long run

answer

when price falls below ATC

question

demand elasticity of perfect competition

answer

perfectly elastic

question

MR. DARP

answer

Marginal Revenue = Demand = Average Revenue = Price

question

what does curve look like in perfect competition when they have $0 economic profit

answer

minimum ATC intersects at MR. DARP

question

MC=MR applies to _____ market structures

answer

all

question

when does the MR=MC rule only apply

answer

when price is above AVC

question

a change in fixed costs changes

answer

ATC and AFC (does NOT change Q produced)

question

a change in variable costs changes

answer

MC, ATC, and AVC (CHANGES Q PRODUCED)

question

changes in fixed costs DO NOT change _____ and just changes _______

answer

output; profit

question

changes in variable costs change ______

answer

output/Q produced

question

per unit tax is paired with a change in

answer

variable costs

question

lump sum tax is paired with a change in

answer

fixed costs

question

productive efficiency

answer

producing at the lowest possible cost
where P=min ATC on graph

question

allocative efficiency

answer

producing at the amount most desired by society
where P=MC

question

constant cost industry

answer

new firms entering the market does not increase the costs for the firms already in the market

question

in a constant cost industry, the long run supply is

answer

horizontal

question

increasing cost industry

answer

New firms entering the market increase the costs for the firms already in the market

question

in an increasing cost industry the supply is

answer

upward sloping

question

in the long run, firms are always ______ efficient

answer

productively and allocatively

question

in the short run, firms are always _________ efficient

answer

allocatively

question

firms will always _____ in the long run

answer

break even

question

if price is above the ATC, the business is running at a

answer

profit

question

if price is below the ATC, the business is running at a

answer

loss

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