Midterm 1 Material Flashcards
(19 cards)
What is microeconomics?
branch of economics that studies the behavior of individual households and firms in making decisions on the allocation of limited resources
What is macroeconomics?
branch of economics dealing with the performance, structure, behavior, and decision making of the whole economy
What are the four categories of economic resources?
land, labor, capital, entrepreneurship
What is a fixed cost?
cost that does not depend on the level of production
What is marginal cost?
the increase in total cost that is brought about by producing one more unit and is defined by the change in total cost divided by the change in quantity
What is a sunk cost?
cost previously incurred that should not be included in the calculation of production costs
What is opportunity cost?
the best alternative use of your resources that should be included in production costs
What is the short-term?
time interval during which producers are able to change the quantity of some but not all the resources they use to produce goods and services
What is the long-term?
time interval during which producers are able to change the quantity of all the resources they use to produce goods and services; all costs are variable
Specialization and division of labor will ___ productivity
increase
What is the law of diminishing returns?
when increasing a factor of production while keeping all the other factors constant, the output per unit will eventually diminish
What are the four types of market structures?
perfect competition, monopolistic competition, oligopoly, monopoly
Describe perfect competition
a lot of sellers; homogenous product; no barriers to entry; no price control
Describe Monopolistic Competition
many sellers; differentiated product; few barriers to entry; some price control
Describe Oligopoly
very few sellers; homogeneous and differentiated product; many barriers to entry; more price control
Describe Monopoly
1 seller; unique product; nearly impossible to enter market; complete price control
What economic profit does a firm in a competitive industry earn in the long run?
zero economic profit
Under perfect competition, P = ?
P = MR (marginal revenue)
For a monopoly, or monopolistic competition, P = ?
d(TR)/dQ where TR = P(Q)*Q
