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Diminishing Marginal Product
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the marginal product of an input declines as the quantity of the input increases; associated with diseconomies of scale
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Double inputs and double outputs
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constant returns to scale
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AC curve for economies of scale
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is downward sloping
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Economic Profit is
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accounting profit-implicit cost
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Perfect Competition
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technically and allocatively efficient
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Natural Monopoly only firm because
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decreasing average costs
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Monopolist produce where demand is
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elastic
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Oligopolies
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no incentive not to cheat
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A government interested in sustainably regulating a natural monopoly might set a price ceiling at ______ because
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average cost; zero economic profits, but more output than the monopoly solution
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