Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

djk > Untitled Deck > Flashcards

Untitled Deck Flashcards

(71 cards)

Start Studying
1
Q

Term

A

Definition

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

What is the price elasticity of demand?

A

Measures how much quantity demanded changes in response to a price change.

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

What is elastic demand?

A

When the price elasticity of demand is greater than 1.

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

What is inelastic demand?

A

When the price elasticity of demand is less than 1.

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

What is unitary elasticity?

A

When the price elasticity of demand equals 1.

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

What factors affect price elasticity of demand?

A

Substitute availability, necessity vs luxury, time, and proportion of income spent.

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

What is the total revenue test?

A

A method to assess elasticity based on how total revenue changes with price.

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

What is price elasticity of supply?

A

Measures responsiveness of quantity supplied to a change in price.

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

What is cross elasticity of demand?

A

Measures how the demand for one good responds to a price change in another good.

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

What is income elasticity of demand?

A

Measures how demand changes as consumer income changes.

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

What is perfectly inelastic demand?

A

Quantity demanded does not change regardless of price changes.

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

What are explicit costs?

A

Monetary payments made by a firm to outsiders to acquire resources.

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

What are implicit costs?

A

Opportunity costs of using resources owned by the firm.

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

What is economic profit?

A

Total revenue minus explicit and implicit costs.

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

What is accounting profit?

A

Total revenue minus explicit costs.

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

What are fixed costs?

A

Costs that do not change with the level of output.

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

What are variable costs?

A

Costs that change with the level of output.

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

What is marginal cost?

A

The additional cost of producing one more unit.

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

What is average total cost?

A

Total cost divided by quantity of output.

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

What is the law of diminishing marginal returns?

A

Adding more of a variable input to fixed inputs eventually leads to smaller increases in output.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is a production function?

A

A relationship showing the maximum output that can be produced with different combinations of inputs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What are the characteristics of pure competition?

A

Large number of firms, identical products, free entry/exit.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What is the demand curve for a firm in pure competition?

A

Perfectly elastic.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What is marginal revenue?

A

The additional revenue from selling one more unit.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
What is the profit maximization rule?
Produce where marginal cost equals marginal revenue (MC = MR).
26
What is the short-run supply curve?
The portion of the marginal cost curve above AVC.
27
What is the shutdown point?
When price equals minimum average variable cost (P = AVC).
28
What is economic profit in the short run?
When total revenue exceeds total cost.
29
What happens if a firm incurs losses in the short run?
It continues to operate if P > AVC but exits if P < AVC.
30
What is allocative efficiency in pure competition?
Producing the mix of goods most desired by society (P = MC).
31
What is productive efficiency in pure competition?
Producing at the lowest cost (P = minimum ATC).
32
What happens to economic profit in the long run?
It becomes zero due to entry and exit of firms.
33
What is a constant-cost industry?
An industry where input costs remain unchanged as firms enter or exit.
34
What is an increasing-cost industry?
An industry where input costs rise as firms enter.
35
What is a decreasing-cost industry?
An industry where input costs fall as firms enter.
36
What is the long-run supply curve?
Shows the relationship between price and quantity supplied when firms can enter or exit.
37
What is dynamic efficiency?
Efficiency achieved through innovation and technology over time.
38
How does long-run equilibrium promote efficiency?
It ensures both productive and allocative efficiency.
39
What is economic scale adjustment?
Changing scale of operations to match market demand.
40
Why do firms exit a market in the long run?
Due to sustained losses where costs exceed revenue.
41
What is break-even pricing?
The price at which total revenue equals total cost.
42
What are the characteristics of a monopoly?
Single seller, no close substitutes, high barriers to entry.
43
What is a natural monopoly?
A market where a single firm can produce at a lower cost than multiple firms.
44
What is marginal revenue in a monopoly?
It is less than price due to the downward-sloping demand curve.
45
What is price discrimination?
Charging different prices to different consumers for the same product.
46
What is the socially optimal price?
Price equals marginal cost (P = MC).
47
What is deadweight loss in a monopoly?
Loss of economic efficiency due to monopolist pricing above marginal cost.
48
What are barriers to entry?
Obstacles like patents, economies of scale, and legal restrictions.
49
What is the fair-return price?
Price equals average total cost (P = ATC).
50
What is monopoly regulation?
Government intervention to control prices or break up monopolies.
51
What is a monopoly’s profit-maximizing output level?
Where marginal revenue equals marginal cost (MR = MC).
52
What are the characteristics of monopolistic competition?
Many sellers, differentiated products, some price control.
53
What is product differentiation?
Making products unique through quality, features, or branding.
54
What is excess capacity?
Operating below efficient scale in the long run.
55
What is nonprice competition?
Strategies like advertising and product improvement to attract customers.
56
What is the role of advertising?
To increase demand and brand loyalty.
57
What is the long-run equilibrium in monopolistic competition?
Economic profit is zero due to entry of new firms.
58
How does monopolistic competition differ from perfect competition?
In monopolistic competition, firms sell differentiated products.
59
What is allocative inefficiency?
Producing where price is greater than marginal cost (P > MC).
60
What is productive inefficiency?
Operating at higher than the minimum average total cost.
61
Why do firms advertise in monopolistic competition?
To differentiate products and capture market share.
62
What are the characteristics of an oligopoly?
Few large firms, interdependence, barriers to entry.
63
What is game theory?
The study of strategic interactions among firms.
64
What is a dominant strategy?
A strategy that is the best regardless of others' actions.
65
What is Nash equilibrium?
A stable outcome where no player can benefit by changing strategy alone.
66
What is a cartel?
A formal agreement to fix prices or output levels.
67
What is the price leadership model?
One firm sets the price, and others follow to avoid price wars.
68
What is collusion?
An agreement among firms to restrict competition.
69
What is a kinked demand curve?
A demand curve with a segment reflecting price rigidity.
70
What is interdependence in oligopoly?
Firms' decisions depend on expected reactions of competitors.
71
Why do cartels often fail?
Incentives to cheat undermine collusion agreements.

djk (5 decks)

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