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Diminishing Return
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an increase in Quantity of that input holding the levels of all other inputs fixed. Leads in Marginal Product. A decrease in the extra output due to the use of an additional unit of a variable input, when more and more of the variable input is used and all other things are held constant
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Marginal Product
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adding an extra person: 1 per day 10 total products to 2 per day 30 total product= marginal product= 20
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Long Run
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Profit= 0
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Short Run
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Profit>0 OR Profit <0
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If firms are experiencing economic losses in the short run, firms will leave the industry and industry output will _____________ and economic losses will _________ in the long run.
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If firms are experiencing economic losses in the short run, firms will leave the industry and industry output will FALL and economic losses will FALL in the long run.
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If marginal cost is greater than average total cost....
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average total cost is increasing
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A firm's marginal cost is...
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the slope of the total cost curve
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When an increase in the firm's output reduces its long-run average total cost, it experiences:
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economies of scale
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Marginal Cost is the change in
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total cost resulting from a one-unit change in output
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one characteristic of a perfectly competitive market is that there are __________ sellers of the good or service
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hundreds or thousands
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in the model of perfect competition
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no individual or firm has enough power to have any impact on price
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In perfect competition, the assumption of easy entry and exit implies that
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in the long run all firm in the industry will earn zero economic profits and in the short run all firms in the industry will earn positive economic profits
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if it produces, a perfectly competitive firm will maximize profits by producing at the quantity at which:
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marginal revenue = marginal cost
MC=MR
MC=MR
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if a perfecftly competitive firm is producing a quantity that generates p>MC then profit..
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can be increased by increasing production
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if your farm has the only known source of a rare cocoa bean needed tro make a chocolate covered peanuts, your monopoly would result from
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control of a scarce resource or input
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compared to perfectly competitive market, a monopolist will produce________ and charge a ______ price
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compared to perfectly competitive market, a monopolist will produce LESS and charge a HIGHER price
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