13899027
Description
Flashcards by Diana Hernandez, updated more than 1 year ago
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Created by Diana Hernandez
over 6 years ago
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| Question | Answer |
| There are many small firms, each producing an identical product and each too small to affect the market price. | Perfect competition |
| faces a completely horizontal demand (or dd) curve | The perfect competition |
| the extra revenue gained from each extra unit sold is therefore | Market price |
| a firm will............. when it produces at that level where marginal cost equals price. | Maximize profits |
| the level of price, at which the firm breaks-even, covering all costs but earning zero-profit | Zero-profit point |
| revenue= ? | Variable costs |
| Losses=? | Fixed costs |
| when revenues just cover variable costs or where losses are equal to fixed costs | Shutdown rule |
| when the price falls below average variable costs. | Shutdown rule |
| Any change in outputs must use the same fixed amount of the factor production | short-run equilibrium |
| when capital and all other factors are variable and there are free entry and exit of firms from the industries. | Long-run equilibrium |
| when they are newly formed or when an existing firm decides to move into a new sector. | entry |
| when they stop producing because the line is unprofitable and can produce that the firms go bankrupt when it can´t pay bills | exit |
| when there are no barriers to entry or exit, such as government regulations or intellectual propoerty rights as patents and softward. | free entry and exit |
| is the price equals marginal cost equals the minimum long-run average cost for each identical firm | zero-profit long run equilibrium |
| Increase in demand for the commodity will raise the price of the commodity | Demand rule |
| An increase in supply of commodity will generally lower the price and increase the quantity bought and sold | supply rule |
| it is when you can increase the annual outputs of a product by adding more labor to each acre of land | increasing costs |
| will operate if variable factor of production are added to fixed amounts of factors such as land | diminish returns |
| the payment for the use of such a factor of production when the quantity supplied is constant at every price | Pure economic rent |
| if the supply decrease | the price increase and quantity decrease |
| if the supply increase | the price decrease and quantity increase |
| the market is ------------ when it provides its consumers with the most desirable set of goods and services, given the resources and technology of the economy | Efficiency |
| occurs when no possible reorganization of production can make anyone better off without making someone else worse off. | allocative efficiency |
| is the balancing of supply and demand in a market or economy characterized by perfect competition | competitive equilibrium |
| the difference between that amount that a consumer would be willing to pay for a commodity and the amount actually paid | consumer surplus |
| the difference between the producer sales revenue and the producer's costs, its measured the area above the supply curve but under the price line up to the amount sold | producer surplus |
| when a firm has market power in a particular market (monopoly). the firm can raise the price of its product above its marginal costs | imperfect competition |
| they arise when some of the side effects of production or consumption are not included in the market price | externalities |
| the invisible-hand theory that assumes that buyers and seller have complete information about the goods and services they buy or sell | imperfect information |
| prevails in an industry whenever individual sellers can affect the price of their output | Imperfect Competition |
| the major kinds of imperfect competition are | Monopoly, oligopoly, and monopolistic competition |
| Imperfect competitors are | price makers not price-takers |
| a single seller with the complete control over an industru | Monopoly |
| Means "Few sellers". each individual firm can affect the market price example; car makers | Oligopoly |
| a large number of sellers produce differentiated products. | Monopolistic competition |
| is a market in which the industry´s outputs can´t efficiently produce by several firms | Natural Monopoly |
| are factors that make it hard for new firms to enter an industry. | Barriers to entry |
| an industry may have few firms and limited pressure to compete, is when | The barriers are high |
| Governments sometimes restrict competition in certain industries, include patents, entry restrictions. | Legal restrictions |
| advertising can create product awareness and loyalty to well- known brands | Advertising and product differentiation |
| the monopolistic practices lead to high prices ad low outputs and therefore reduce consumer welfare. | Monopoly behavior |
| the conditions of maximization in perfect competition | P=MC |
| The conditions of maximization in monopoly | MI=MC |
| Is the change in revenue that is generated by an additional unit of sales. | Marginal revenue |
| what is the relation between the price elasticity of demand and marginal revenue? | Marginal revenue is positive when demand is elastic Zero when demand is unit-elastic and negative when demand is inelastic |
| will occur when outputs are at the level where the firm's marginal revenue when is equal to his marginal cost | Maximum profit |
| monopoly equilibrium is also called | maximum-profit point |
| a monopolistic will maximize its profits by setting output at the lever where | MC=MR |
| The marginal principle | Let bygones be bygones |
| Means that the people will maximize their incomes or profits or satisfaction by counting only the marginal costs and marginal benefits of a decision | Marginal principle |
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