microeconomics unit 3 test

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Posted on

March 14th, 2023

question

production function

answer

the relationship between quantity of inputs used to make a good and the quantity of output of that good

question

marginal product

answer

the increase in output that arises from an additional unit of input. change in total product. anti nike swoosh

question

3 phases of law of diminishing marginal utility

answer

1) increasing returns (result of specialization). 2) diminishing returns. 3) decreasing returns

question

marginal cost

answer

wage/ marginal product. nike swoosh shape. as diminishing returns set in, it goes high. Intersects AVC at min point.

question

fixed cost

answer

costs you have to pay no matter what. Like rent, equipments

question

variable cost

answer

cost that changes with the output. Like workers, electricity

question

total cost

answer

fixed costs plus variable costs

question

gap between total cost and variable cost

answer

fixed cost

question

AVC, AFC (gap btw ATC and AVC), ATC (which min intersects MC, called the productively efficient)

answer

VC/Q(quantity), FC/Q, TC/Q

question

change in FC

answer

only moves ATC and AFC

question

change in VC

answer

moves ATC, MC, AVC

question

in long run

answer

all costs are variable.

question

short run vs long run

answer

rate of production (workers, wages) vs capacity of production (opening businesses)

question

economies of scale

answer

average cost are falling caused by production. First portion of the long run graph. also called increasing returns to scale

question

constant returns to scale

answer

the property whereby long-run average total cost stays the same as the quantity of output changes

question

diseconomies of scale

answer

the property whereby long-run average total cost rises as the quantity of output increases

question

accounting profit vs economic profit

answer

total rev - explicit cost vs total rev - explicit - implicit cost( the what ifs )

question

normal profit

answer

economic profit is 0. it is a good thing

question

MC = MR

answer

profit maximization

question

perfectly competitive market

answer

(1) many firms (2) selling identical product (3) firms can enter (when others are making profit) and exit (when others suffer economic losses) (4) zero economic profit in long run (5) price takers

question

MRDARP

answer

Marginal Revenue = Demand = Average Revenue = Price

question

allocative efficiency

answer

firms are this in long run because p=MC

question

productive efficiency

answer

in long run because they produce at the minimum cost

question

price above AVC and lower than ATC

answer

negative economic profit but should still stay in because or else they would have to pay more

question

P = AVC

answer

shut down point

question

increasing cost industry

answer

MC and ATC shifts up

1 of 26

question

production function

answer

the relationship between quantity of inputs used to make a good and the quantity of output of that good

question

marginal product

answer

the increase in output that arises from an additional unit of input. change in total product. anti nike swoosh

question

3 phases of law of diminishing marginal utility

answer

1) increasing returns (result of specialization). 2) diminishing returns. 3) decreasing returns

question

marginal cost

answer

wage/ marginal product. nike swoosh shape. as diminishing returns set in, it goes high. Intersects AVC at min point.

question

fixed cost

answer

costs you have to pay no matter what. Like rent, equipments

question

variable cost

answer

cost that changes with the output. Like workers, electricity

question

total cost

answer

fixed costs plus variable costs

question

gap between total cost and variable cost

answer

fixed cost

question

AVC, AFC (gap btw ATC and AVC), ATC (which min intersects MC, called the productively efficient)

answer

VC/Q(quantity), FC/Q, TC/Q

question

change in FC

answer

only moves ATC and AFC

question

change in VC

answer

moves ATC, MC, AVC

question

in long run

answer

all costs are variable.

question

short run vs long run

answer

rate of production (workers, wages) vs capacity of production (opening businesses)

question

economies of scale

answer

average cost are falling caused by production. First portion of the long run graph. also called increasing returns to scale

question

constant returns to scale

answer

the property whereby long-run average total cost stays the same as the quantity of output changes

question

diseconomies of scale

answer

the property whereby long-run average total cost rises as the quantity of output increases

question

accounting profit vs economic profit

answer

total rev - explicit cost vs total rev - explicit - implicit cost( the what ifs )

question

normal profit

answer

economic profit is 0. it is a good thing

question

MC = MR

answer

profit maximization

question

perfectly competitive market

answer

(1) many firms (2) selling identical product (3) firms can enter (when others are making profit) and exit (when others suffer economic losses) (4) zero economic profit in long run (5) price takers

question

MRDARP

answer

Marginal Revenue = Demand = Average Revenue = Price

question

allocative efficiency

answer

firms are this in long run because p=MC

question

productive efficiency

answer

in long run because they produce at the minimum cost

question

price above AVC and lower than ATC

answer

negative economic profit but should still stay in because or else they would have to pay more

question

P = AVC

answer

shut down point

question

increasing cost industry

answer

MC and ATC shifts up

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