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djk > Untitled Deck > Flashcards

Untitled Deck Flashcards

(70 cards)

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1
Q

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

A

What is the price elasticity of demand?

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2
Q

When the price elasticity of demand is greater than 1.

A

What is elastic demand?

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3
Q

When the price elasticity of demand is less than 1.

A

What is inelastic demand?

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4
Q

When the price elasticity of demand equals 1.

A

What is unitary elasticity?

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5
Q

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

A

What factors affect price elasticity of demand?

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6
Q

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

A

What is the total revenue test?

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7
Q

Measures responsiveness of quantity supplied to a change in price.

A

What is price elasticity of supply?

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8
Q

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

A

What is cross elasticity of demand?

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9
Q

Measures how demand changes as consumer income changes.

A

What is income elasticity of demand?

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10
Q

Quantity demanded does not change regardless of price changes.

A

What is perfectly inelastic demand?

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11
Q

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

A

What are explicit costs?

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12
Q

Opportunity costs of using resources owned by the firm.

A

What are implicit costs?

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13
Q

Total revenue minus explicit and implicit costs.

A

What is economic profit?

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14
Q

Total revenue minus explicit costs.

A

What is accounting profit?

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15
Q

Costs that do not change with the level of output.

A

What are fixed costs?

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16
Q

Costs that change with the level of output.

A

What are variable costs?

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17
Q

The additional cost of producing one more unit.

A

What is marginal cost?

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18
Q

Total cost divided by quantity of output.

A

What is average total cost?

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19
Q

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

A

What is the law of diminishing marginal returns?

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20
Q

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

A

What is a production function?

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21
Q

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

A

What are the characteristics of pure competition?

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22
Q

Perfectly elastic.

A

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

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23
Q

The additional revenue from selling one more unit.

A

What is marginal revenue?

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24
Q

Produce where marginal cost equals marginal revenue (MC = MR).

A

What is the profit maximization rule?

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25
The portion of the marginal cost curve above AVC.
What is the short-run supply curve?
26
When price equals minimum average variable cost (P = AVC).
What is the shutdown point?
27
When total revenue exceeds total cost.
What is economic profit in the short run?
28
It continues to operate if P > AVC but exits if P < AVC.
What happens if a firm incurs losses in the short run?
29
Producing the mix of goods most desired by society (P = MC).
What is allocative efficiency in pure competition?
30
Producing at the lowest cost (P = minimum ATC).
What is productive efficiency in pure competition?
31
It becomes zero due to entry and exit of firms.
What happens to economic profit in the long run?
32
An industry where input costs remain unchanged as firms enter or exit.
What is a constant-cost industry?
33
An industry where input costs rise as firms enter.
What is an increasing-cost industry?
34
An industry where input costs fall as firms enter.
What is a decreasing-cost industry?
35
Shows the relationship between price and quantity supplied when firms can enter or exit.
What is the long-run supply curve?
36
Efficiency achieved through innovation and technology over time.
What is dynamic efficiency?
37
It ensures both productive and allocative efficiency.
How does long-run equilibrium promote efficiency?
38
Changing scale of operations to match market demand.
What is economic scale adjustment?
39
Due to sustained losses where costs exceed revenue.
Why do firms exit a market in the long run?
40
The price at which total revenue equals total cost.
What is break-even pricing?
41
Single seller, no close substitutes, high barriers to entry.
What are the characteristics of a monopoly?
42
A market where a single firm can produce at a lower cost than multiple firms.
What is a natural monopoly?
43
It is less than price due to the downward-sloping demand curve.
What is marginal revenue in a monopoly?
44
Charging different prices to different consumers for the same product.
What is price discrimination?
45
Price equals marginal cost (P = MC).
What is the socially optimal price?
46
Loss of economic efficiency due to monopolist pricing above marginal cost.
What is deadweight loss in a monopoly?
47
Obstacles like patents, economies of scale, and legal restrictions.
What are barriers to entry?
48
Price equals average total cost (P = ATC).
What is the fair-return price?
49
Government intervention to control prices or break up monopolies.
What is monopoly regulation?
50
Where marginal revenue equals marginal cost (MR = MC).
What is a monopoly’s profit-maximizing output level?
51
Many sellers, differentiated products, some price control.
What are the characteristics of monopolistic competition?
52
Making products unique through quality, features, or branding.
What is product differentiation?
53
Operating below efficient scale in the long run.
What is excess capacity?
54
Strategies like advertising and product improvement to attract customers.
What is nonprice competition?
55
To increase demand and brand loyalty.
What is the role of advertising?
56
Economic profit is zero due to entry of new firms.
What is the long-run equilibrium in monopolistic competition?
57
In monopolistic competition, firms sell differentiated products.
How does monopolistic competition differ from perfect competition?
58
Producing where price is greater than marginal cost (P > MC).
What is allocative inefficiency?
59
Operating at higher than the minimum average total cost.
What is productive inefficiency?
60
To differentiate products and capture market share.
Why do firms advertise in monopolistic competition?
61
Few large firms, interdependence, barriers to entry.
What are the characteristics of an oligopoly?
62
The study of strategic interactions among firms.
What is game theory?
63
A strategy that is the best regardless of others' actions.
What is a dominant strategy?
64
A stable outcome where no player can benefit by changing strategy alone.
What is Nash equilibrium?
65
A formal agreement to fix prices or output levels.
What is a cartel?
66
One firm sets the price, and others follow to avoid price wars.
What is the price leadership model?
67
An agreement among firms to restrict competition.
What is collusion?
68
A demand curve with a segment reflecting price rigidity.
What is a kinked demand curve?
69
Firms' decisions depend on expected reactions of competitors.
What is interdependence in oligopoly?
70
Incentives to cheat undermine collusion agreements.
Why do cartels often fail?

djk (5 decks)

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