Section 10 Microeconomic - Assignment Essays

question

profit

answer

total revenue minus total cost

question

explicit costs

answer

Cost that requires an outlay of money

question

total opportunity cost

answer

total explicit cost + total implicit cost

question

implicit costs

answer

Measured by the value, in dollar terms, of the benefits that are forgone

question

accounting profit

answer

total revenue minus total explicit cost

question

economic profit

answer

total revenue minus opportunity cost, including both explicit and implicit costs

question

implicit cost of capital

answer

the opportunity cost of the capital used by a business— reflects the income that could have been earned if the capital had been used in its next best alternative way

question

normal profit

answer

economic profit equal to zero

question

total revenue

answer

Price x Quantity

question

marginal revenue

answer

Change in total revenue/ change in quantity of output

question

Principal of Marginal Analysis

answer

every activity should continue until marginal benefit equals marginal cost

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

marginal cost curve

answer

Shows relationship between marginal cost and output

question

Marginal revenue curve

answer

shows relationship between marginal revenue and output

question

production function

answer

The quantity of output a firm produces depends on the quantity of inputs

question

fixed input

answer

an input whose quantity is fixed for a period of time and cannot be varied

question

variable input

answer

an input whose quantity the firm can vary at any time

question

long run

answer

the time period in which all inputs can be varied

question

short run

answer

the period of time during which at least one of a firm's inputs is fixed

question

total product curve

answer

shows how the quantity of output depends on the quantity of the variable input, for a given quantity of the fixed input

question

marginal product of labor

answer

the additional quantity of output from using one more unit of labor

Change in quantity of output/ change in quantity of labor

question

diminishing returns to an input

answer

when an increase in the quantity of that input, holding the levels of all other inputs fixed, leads to a decline in the marginal product of that input. Negative slope

question

fixed costs

answer

Cost that does not depend on the quantity of output produced

question

variable costs

answer

Cost that depends on the quantity of output produced

question

total cost

answer

fixed costs plus variable costs

question

total cost curve

answer

shows how total cost depends on the quantity of output

question

marginal cost

answer

change in total cost / change in quantity of output

question

average total cost

answer

total cost / quantity of output

question

average fixed cost

answer

fixed cost divided by the quantity of output

question

average variable cost

answer

variable cost divided by the quantity of output

question

spreading effect

answer

the larger the output, the greater the quantity of output over which fixed cost is spread, leading to lower average fixed cost

question

Diminishing returns effect

answer

the larger the output, the greater the amount of variable input required to produce additional units, leading to higher average variable cost

question

minimum-cost output

answer

the quantity of output that corresponds to the minimum average total cost

question

average product

answer

total product/quantity of labor

question

Average product curve for labor

answer

Shows relationship between the average product of labor and the quantity of labor

question

long-run average total cost curve

answer

shows the relationship between output and average total cost when fixed cost has been chosen to minimize average total cost for each level of output

question

economies of scale

answer

Exist when long run average total cost declines as output increases

question

increasing returns to scale

answer

when output increases more than in proportion to an increase in all inputs

question

minimum efficient scale

answer

the smallest quantity at which a firm's long-run average total cost is minimized

question

diseconomies of scale

answer

the situation in which a firm's long-run average costs rise as the firm increases output

question

decreasing returns to scale

answer

output increases less than in proportion to an increase in all inputs

question

constant returns to scale

answer

output increases directly in proportion to an increase in all inputs

question

sunk cost

answer

a cost that has already been paid and cannot be recovered

question

price-taking firm

answer

a firm whose actions have no effect on the market price of the good or service it sells

question

price-taking consumer

answer

a consumer whose actions have no effect on the market price of the good or service he or she buys

question

Perfectly competitive market

answer

a market in which all market participants are price-takers

question

perfectly competitive industry

answer

an industry in which firms are price-takers

question

Standards to a perfectly competitive market

answer

A market that meets the conditions of (1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market.

question

market share

answer

the fraction of the total industry output accounted for by that producer's output

question

standardized product

answer

a product that consumers regard as the same good even when it comes from different producers

question

Free entry and exit

answer

when new producers can easily enter into an industry and existing producers can easily leave that industry

question

Monopolist

answer

a firm that is the only producer of a good that has no close substitutes

question

Monopoly

answer

Industry controlled by a monopolist

question

barriers to entry

answer

business practices or conditions that make it difficult for new firms to enter the market. Help keep monopoly

question

natural monopoly

answer

A monopoly created and sustained by economies of scale

question

patent

answer

gives the inventor the sole right to make, use, or sell the item for 20 years

question

answer

Gives the copyright holder- the sole right to profit from that work

question

Oligopoly

answer

A market structure in which a few large firms dominate a market

question

oligopolist

answer

a producer in an oligopoly

question

imperfect competition

answer

a market structure that does not meet the conditions of perfect competition

question

concentration ratio

answer

A measure of the percentage of the market share accounted for by the largest firms in the industry

question

HHI

answer

sum of squared market shares

question

monopolistic competition

answer

1) large number of competing firms
2) differentiated products
3) free entry into and exit from industry in the long run

1 of 63

question

profit

answer

total revenue minus total cost

question

explicit costs

answer

Cost that requires an outlay of money

question

total opportunity cost

answer

total explicit cost + total implicit cost

question

implicit costs

answer

Measured by the value, in dollar terms, of the benefits that are forgone

question

accounting profit

answer

total revenue minus total explicit cost

question

economic profit

answer

total revenue minus opportunity cost, including both explicit and implicit costs

question

implicit cost of capital

answer

the opportunity cost of the capital used by a business— reflects the income that could have been earned if the capital had been used in its next best alternative way

question

normal profit

answer

economic profit equal to zero

question

total revenue

answer

Price x Quantity

question

marginal revenue

answer

Change in total revenue/ change in quantity of output

question

Principal of Marginal Analysis

answer

every activity should continue until marginal benefit equals marginal cost

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

marginal cost curve

answer

Shows relationship between marginal cost and output

question

Marginal revenue curve

answer

shows relationship between marginal revenue and output

question

production function

answer

The quantity of output a firm produces depends on the quantity of inputs

question

fixed input

answer

an input whose quantity is fixed for a period of time and cannot be varied

question

variable input

answer

an input whose quantity the firm can vary at any time

question

long run

answer

the time period in which all inputs can be varied

question

short run

answer

the period of time during which at least one of a firm's inputs is fixed

question

total product curve

answer

shows how the quantity of output depends on the quantity of the variable input, for a given quantity of the fixed input

question

marginal product of labor

answer

the additional quantity of output from using one more unit of labor

Change in quantity of output/ change in quantity of labor

question

diminishing returns to an input

answer

when an increase in the quantity of that input, holding the levels of all other inputs fixed, leads to a decline in the marginal product of that input. Negative slope

question

fixed costs

answer

Cost that does not depend on the quantity of output produced

question

variable costs

answer

Cost that depends on the quantity of output produced

question

total cost

answer

fixed costs plus variable costs

question

total cost curve

answer

shows how total cost depends on the quantity of output

question

marginal cost

answer

change in total cost / change in quantity of output

question

average total cost

answer

total cost / quantity of output

question

average fixed cost

answer

fixed cost divided by the quantity of output

question

average variable cost

answer

variable cost divided by the quantity of output

question

spreading effect

answer

the larger the output, the greater the quantity of output over which fixed cost is spread, leading to lower average fixed cost

question

Diminishing returns effect

answer

the larger the output, the greater the amount of variable input required to produce additional units, leading to higher average variable cost

question

minimum-cost output

answer

the quantity of output that corresponds to the minimum average total cost

question

average product

answer

total product/quantity of labor

question

Average product curve for labor

answer

Shows relationship between the average product of labor and the quantity of labor

question

long-run average total cost curve

answer

shows the relationship between output and average total cost when fixed cost has been chosen to minimize average total cost for each level of output

question

economies of scale

answer

Exist when long run average total cost declines as output increases

question

increasing returns to scale

answer

when output increases more than in proportion to an increase in all inputs

question

minimum efficient scale

answer

the smallest quantity at which a firm's long-run average total cost is minimized

question

diseconomies of scale

answer

the situation in which a firm's long-run average costs rise as the firm increases output

question

decreasing returns to scale

answer

output increases less than in proportion to an increase in all inputs

question

constant returns to scale

answer

output increases directly in proportion to an increase in all inputs

question

sunk cost

answer

a cost that has already been paid and cannot be recovered

question

price-taking firm

answer

a firm whose actions have no effect on the market price of the good or service it sells

question

price-taking consumer

answer

a consumer whose actions have no effect on the market price of the good or service he or she buys

question

Perfectly competitive market

answer

a market in which all market participants are price-takers

question

perfectly competitive industry

answer

an industry in which firms are price-takers

question

Standards to a perfectly competitive market

answer

A market that meets the conditions of (1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market.

question

market share

answer

the fraction of the total industry output accounted for by that producer's output

question

standardized product

answer

a product that consumers regard as the same good even when it comes from different producers

question

Free entry and exit

answer

when new producers can easily enter into an industry and existing producers can easily leave that industry

question

Monopolist

answer

a firm that is the only producer of a good that has no close substitutes

question

Monopoly

answer

Industry controlled by a monopolist

question

barriers to entry

answer

business practices or conditions that make it difficult for new firms to enter the market. Help keep monopoly

question

natural monopoly

answer

A monopoly created and sustained by economies of scale

question

patent

answer

gives the inventor the sole right to make, use, or sell the item for 20 years

question

answer

Gives the copyright holder- the sole right to profit from that work

question

Oligopoly

answer

A market structure in which a few large firms dominate a market

question

oligopolist

answer

a producer in an oligopoly

question

imperfect competition

answer

a market structure that does not meet the conditions of perfect competition

question

concentration ratio

answer

A measure of the percentage of the market share accounted for by the largest firms in the industry

question

HHI

answer

sum of squared market shares

question

monopolistic competition

answer

1) large number of competing firms
2) differentiated products
3) free entry into and exit from industry in the long run

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order