Quiz #5 Vocab Flashcards Preview

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Flashcards in Quiz #5 Vocab Deck (14):

Time period in which some resources or inputs cannot be changed (size or scale of the firm remains fixed)

Short run


Time period in which all resources are variable and can be changed

Long run


Increased size of the firm enables efficiency such that long run average total cost falls

Economies of scale


A doubling of inputs results in a more than doubling of output

Increasing returns to scale


A doubling of inputs results in a less than doubling of output

Decreasing returns to scale


A doubling of inputs results in a doubling of output

Constant returns to scale


When revenue exceeds cost; considered positive when firms earn a normal profit

Accounting profit


When accounting profit is above and beyond when could be earned elsewhere with the same resources

Economic profit


When profit is positive but competitive, i.e. Not greater than I could be in an alternative use of the same resources

Normal profit


Firms charge each consumer the maximum price they are willing to pay; MR curve become D curve, no consumer surplus

Perfect price discrimination (first degree)


The amount of power or influence one firm has over the price of their good

Market power


In the game theory this is the choice in which the player is better off regardless of what the other player does

Dominant strategy


A game theory equilibrium in which the outcome is the best both players can do given what the other does and from which there is no reason or incentive to deviate

Nash equilibrium


As more unit of variable input are added to a fixed resource the amount it adds to total output diminished

Diminishing marginal returns