mod 58, 59, 60 - Assignment Essays

question

MR = MC rule applies

answer

at the optimal quantity of output

question

optimal output rule

answer

profit is maximized by producing the quantity of output at which the marginal revenue of the last unit produced is equal to its marginal cost

question

how to find marginal revenue

answer

change in total revenue / change in quantity

question

marginal cost

answer

the cost of producing one more unit of a good

ΔTC/ΔQ

question

net gain

answer

MR − MC

question

price taking firms optimal output rule

answer

price equals marginal cost at the pricetaking firm’s optimal quantity of output

question

a price-taking firm’s profit is maximized by

answer

producing the quantity of output at which the market price is equal to the marginal cost of the last unit produced.

question

a price taking firm cannot

answer

influence the market price by its actions

question

The Price-Taking Firm’s Profit Maximizing Quantity of Output graph

answer

the average amount of revenue taken in per unit—because price equals average revenue whenever every unit is sold for the same price

question

average revenue

answer

total revenue - explicit costs - implicit costs

question

economic profit

answer

total revenue - explicit costs

question

accounting profit

answer

VC/Q

question

short run average variable cost (AVC)

answer

TC/Q

question

short run average variable cost (ATC)

answer

the point at which a firm is just able to stay open in the long run

question

Minimum average total cost

answer

nike shaped

question

Minimum average total cost on a graph

answer

above avc

question

mc line is always

answer

bowl shaped

question

atc is always

answer

at market price, a horizontal line

question

atc and avc are always

answer

it is profitable

question

MR =P=D line

answer

the firm breaks even

question

If the firm produces a quantity at which TR > TC

answer

the firm incurs a loss

question

If the firm produces a quantity at which TR = TC

answer

TR/Q − TC/Q

question

If the firm produces a quantity at which TR < TC

answer

the firm is profitable

question

Profit/Q

answer

firm breaks even

question

If the firm produces a quantity at which P > ATC

answer

the firm incurs a loss

question

If the firm produces a quantity at which P = ATC

answer

MR = P

question

If the firm produces a quantity at which P < ATC

answer

(TR/Q − TC/Q) × Q

question

for a perfectly competitive firm it is always true that

answer

The price where average revenue is equal to average total cost. Below this price, the firm will shut down in the long run.

question

Profit = TR − TC also equals

answer

ATC − P

question

Profitability and the Market Price graph

answer

the point at which a firm is just able to stay open in the long run

question

break even price

answer

producer is profitable

question

break even price eqn

answer

producer is breaks even

question

minimum average total cost

answer

producer is unprofitable

question

Whenever the market price exceeds the minimum average total cost

answer

irrelevant to their decision about whether to produce or shut down in the short run.

question

Whenever the market price equals the minimum average total cost

answer

a critical consideration when determining whether or not to produce in the short run

question

Whenever the market price is less than the minimum average total cost

answer

minimum average variable cost

The price where average revenue is equal to average variable cost. Below this price, the firm will shut down in the short run.

question

Since it cannot be changed in the short run, their fixed cost is

answer

When the market price is below the minimum average variable cost

When the market price is greater than or equal to the minimum average variable cost

question

Variable cost can be eliminated by not producing, which makes it

answer

to minimum average variable cost

question

shut down price

answer

shows how an individual producer's profit-maximizing output quantity depends on the market price, taking fixed cost as given

question

shut down price 2 important things

answer

the relationship between price and the total output of an industry

question

shut down price is equal

answer

the quantity that producers will supply at each price

question

short-run individual supply curve

answer

quantity supplied = quantity demanded

question

Summary of the Perfectly Competitive Firm’s Profitability and Production Conditions

answer

when quantity supplied = quantity demanded when there is time for entry and exit

question

industry supply curve

answer

the response to price when producers have time to enter/exit the industry

question

short run industry supply curve

answer

1. the value of mc is the same for all firms

2. the industry makes 0 economic profit or a normal profit in the long run

3. the market is efficient in the long run

question

short run market equilibirum

answer

All goods exactly the same
Buyers & sellers so numerous that no one can affect market price—each is a "price taker"

question

long run market equilibrium

answer

positive profit

question

long run industry supply curve

answer

negative profit

question

3 important things for s perfectly competitive market

answer

a firms long run average cost curve does n ot shift as the industry expands

question

perfectly competitive

answer

Entry of new firms shifts the cost curves for all firms downward

question

if atc goes down

answer

undefined

question

if atc goes up

answer

undefined

question

constant cost industry

answer

undefined

question

decreasing cost industry

answer

undefined

1 of 54

question

MR = MC rule applies

answer

at the optimal quantity of output

question

optimal output rule

answer

profit is maximized by producing the quantity of output at which the marginal revenue of the last unit produced is equal to its marginal cost

question

how to find marginal revenue

answer

change in total revenue / change in quantity

question

marginal cost

answer

the cost of producing one more unit of a good

ΔTC/ΔQ

question

net gain

answer

MR − MC

question

price taking firms optimal output rule

answer

price equals marginal cost at the pricetaking firm’s optimal quantity of output

question

a price-taking firm’s profit is maximized by

answer

producing the quantity of output at which the market price is equal to the marginal cost of the last unit produced.

question

a price taking firm cannot

answer

influence the market price by its actions

question

The Price-Taking Firm’s Profit Maximizing Quantity of Output graph

answer

the average amount of revenue taken in per unit—because price equals average revenue whenever every unit is sold for the same price

question

average revenue

answer

total revenue - explicit costs - implicit costs

question

economic profit

answer

total revenue - explicit costs

question

accounting profit

answer

VC/Q

question

short run average variable cost (AVC)

answer

TC/Q

question

short run average variable cost (ATC)

answer

the point at which a firm is just able to stay open in the long run

question

Minimum average total cost

answer

nike shaped

question

Minimum average total cost on a graph

answer

above avc

question

mc line is always

answer

bowl shaped

question

atc is always

answer

at market price, a horizontal line

question

atc and avc are always

answer

it is profitable

question

MR =P=D line

answer

the firm breaks even

question

If the firm produces a quantity at which TR > TC

answer

the firm incurs a loss

question

If the firm produces a quantity at which TR = TC

answer

TR/Q − TC/Q

question

If the firm produces a quantity at which TR < TC

answer

the firm is profitable

question

Profit/Q

answer

firm breaks even

question

If the firm produces a quantity at which P > ATC

answer

the firm incurs a loss

question

If the firm produces a quantity at which P = ATC

answer

MR = P

question

If the firm produces a quantity at which P < ATC

answer

(TR/Q − TC/Q) × Q

question

for a perfectly competitive firm it is always true that

answer

The price where average revenue is equal to average total cost. Below this price, the firm will shut down in the long run.

question

Profit = TR − TC also equals

answer

ATC − P

question

Profitability and the Market Price graph

answer

the point at which a firm is just able to stay open in the long run

question

break even price

answer

producer is profitable

question

break even price eqn

answer

producer is breaks even

question

minimum average total cost

answer

producer is unprofitable

question

Whenever the market price exceeds the minimum average total cost

answer

irrelevant to their decision about whether to produce or shut down in the short run.

question

Whenever the market price equals the minimum average total cost

answer

a critical consideration when determining whether or not to produce in the short run

question

Whenever the market price is less than the minimum average total cost

answer

minimum average variable cost

The price where average revenue is equal to average variable cost. Below this price, the firm will shut down in the short run.

question

Since it cannot be changed in the short run, their fixed cost is

answer

When the market price is below the minimum average variable cost

When the market price is greater than or equal to the minimum average variable cost

question

Variable cost can be eliminated by not producing, which makes it

answer

to minimum average variable cost

question

shut down price

answer

shows how an individual producer's profit-maximizing output quantity depends on the market price, taking fixed cost as given

question

shut down price 2 important things

answer

the relationship between price and the total output of an industry

question

shut down price is equal

answer

the quantity that producers will supply at each price

question

short-run individual supply curve

answer

quantity supplied = quantity demanded

question

Summary of the Perfectly Competitive Firm’s Profitability and Production Conditions

answer

when quantity supplied = quantity demanded when there is time for entry and exit

question

industry supply curve

answer

the response to price when producers have time to enter/exit the industry

question

short run industry supply curve

answer

1. the value of mc is the same for all firms

2. the industry makes 0 economic profit or a normal profit in the long run

3. the market is efficient in the long run

question

short run market equilibirum

answer

All goods exactly the same
Buyers & sellers so numerous that no one can affect market price—each is a "price taker"

question

long run market equilibrium

answer

positive profit

question

long run industry supply curve

answer

negative profit

question

3 important things for s perfectly competitive market

answer

a firms long run average cost curve does n ot shift as the industry expands

question

perfectly competitive

answer

Entry of new firms shifts the cost curves for all firms downward

question

if atc goes down

answer

undefined

question

if atc goes up

answer

undefined

question

constant cost industry

answer

undefined

question

decreasing cost industry

answer

undefined

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