Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Economics Term 1 Grade 11 > dynamics of imperfect markets > Flashcards

dynamics of imperfect markets Flashcards

(51 cards)

Start Studying
1
Q

what does total revenue equal

A

Price x Quantity
P xQ

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what does average revenue equal

A

total reveue/quantity
AR=TR divided by number of units sold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Marginal Revenue (MR)

A

the change total revenue when one extra unit of output is sold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

what is always lower than the price of the product except for the first unit sold

A

the marginal revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

explain the movements of the MC curve

A

decreases, reaches a minimum and then increases

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

explain the movements of the AC curve

A

decreases, reaches a minimum and then increases

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

3 examples of imperfect markets

A

monopolies
oligopolies
monopolistic competition

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

define the word monopoly

A

a market structure in which there is only one seller of a good or service that has no close substitutes. entry to the market is completely blocked

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

what is the demand curve also known as

A

average revenue curve (AR)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

total revenue equation

A

price x quantity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

average revenue

A

total cost divided by quantity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

marginal revenue

A

it is the change in total revenue when one additional unit has been sold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

what effect does a downward sloping demand curve have on the marginal revenue

A

MR curve runs below the demand curve

the MR curve intersects the horizontal axis at a point that is exactly halfway between the origin and the POI of the demand curve

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

what will a monopolist have

A

a pricing policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

when the price decreases what happens to units sold

A

they increase

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

why will the monopolist not fix his/her price lower than the centre point of the demand curve

A

the monopolists total revenue will decrease when the price is in the bottom half of the demand curve

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

in which type of market is AR=MR=P

A

perfectly competitive market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

what does any point on the monopolies demand curve indicate

A

the quantity of the product that can be sold and the price at which it will trade

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

why will MR always be lower than AR

A

the percentage increase in the quantity demanded is greater than the percentage decrease in price at all points

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

why are AR and MR 2 different curves
(5)

A
  1. in a perfectly competitive market the AR=MR=P
  2. a monopoly is confronted with a normal market demand curve D=AR
  3. ant point on the monopolist’s demand curve is an indication of the quantity of the product that can be sold and the price at which it will trade
  4. MR curve runs below the demand curve with the exception of the first unit
  5. MR always lower than AR
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

why are AR and MR 2 different curves
(5)

Study These Flashcards
A
  1. in a perfectly competitive market the AR=MR=P
  2. a monopoly is confronted with a normal market demand curve D=AR
  3. ant point on the monopolist’s demand curve is an indication of the quantity of the product that can be sold and the price at which it will trade
  4. MR curve runs below the demand curve with the exception of the first unit
  5. MR is always lower than AR
22
Q

when do monopolist’s try to maximize profit

23
Q

two types of cost curves

Study These Flashcards
A

short term marginal revenue (SMC)
short term average cost curve (SAC)

24
Q

where is the short-term equilibrium
when a profit is being made

Study These Flashcards
A

where marginal cost equals marginal revenue. SMC = MR

25
what can the point be referred to where SMC = MR when a profit is being made
the profit maximization point
26
the equation for total revenue when calculating profit
price x quantity 0P1 x 0Q1 = 0P1CQ1
27
the equation for total cost when calculating profit
average cost x quantity 0D x 0Q1 = 0DBQ1
28
equation for total profit when calculating profit
Total Revenue - Total Cost = Total Profit 0P1CQ1 - 0DBQ1 = DP1CB
29
what happens when the SAC lies above the demand (AR) curve
short term loss
30
where is the equilibrium when a short term loss is being made
where MR = SMC
31
equation for total cost when a loss is being made
0Q1 x Q1B
32
where is total output cost when a loss is being made
Q1=0Q1BA
33
the equation for total revue when a loss is being made
0Q1 x Q1DP1
34
where is the monopolists loss on the graph
ABDP1
35
what will the monopolist do when they are making a short term loss
they will expand their plant size so that they can make profits
36
which two cost curves appear in the graph showing long term equilibrium
long term marginal cost (LMC) Long term average cost (LAC)
37
Where is long term profit maximised
where MR = LMC
38
what is an oligopoly
a market structure in which a few sellers dominate the market
39
what is it called when there are only two businesses in an oligopoly
a duopoly
40
examples of an oligopoly
identical such as steel, cement etc
41
when does the market form exist
when a small group of large firms dominate the market for a particular product
42
what does the kinked demand curve show
the reason why we experience price rigidity in an oligopolist market. it illustrates the importance of interdependence and uncertainty in oligopolistic markets
43
how so oligopolists assume their competitors will not react to a price increase
by also raising the price of their products
44
why do oligopolies prefer not to compete on price
because it can develop into a price war
45
what will any MC curve that passes through the vertical part of the MR curve yield
the same price and quantity
46
what is monopolistic competition
a market structure which combines certain certain features of monopoly and perfect competition
47
which direction does the demand curve of firms facing monopolistic competition face
down
48
what is the demand curve in monopolistic comp also known as
the AR curve
49
why is the demand curve in a monopolistic come more elastic than in a monopoly
there are more close substitutes for the product
50
when is profit maximized in monopolistic competition
when MC=MR
51
why will more businesses be attracted to the industry in the long term
because of the economic profits earned in the short term

Economics Term 1 Grade 11 (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions