11/6 Flashcards

1
Q

short run

A

some input is fixed ((K)apital) over some period of time so cost is fixed

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2
Q

long run

A

all inputs are variable

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3
Q

long run with firms

A

firms enter or exit, so there is a new equilibrium (Zero profit)

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4
Q

short run with firms

A

equilibrium profit, loss

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5
Q

production effiency is

A

the econ term describes level where an economy can no longer produce additional amounts of a good without lowering production level of another product

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6
Q

what type of efficiency is where the firm has reached the point where you are at the minimum ATC

A

production efficiency
-only hit by perfect competition

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7
Q

allocative efficiency

A

p=mc (perfect competition)

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8
Q

what type of market is allocative efficiency

A

where optimal distribution if goods in a economy meets the needs and wants of society

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9
Q

goal of allocative efficiency

A

ensure resources are used so that their marginal benefit to society is equal to their marginal cost

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10
Q

what happens to supply when firms enter

A

more supply

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11
Q

what happens to supply when firms exit

A

less supply

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12
Q

process of long run supply

A

1)zero profit
2)demand goes up -> profit is greater than zero
3)entry - supply goes up
4)supply increases, price decreases
….
5)price <ATC, zero profit

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13
Q

constant costs and increasing costs are

A

industries

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14
Q

constant costs

A

each firm cost arent impacted by entry or exit of new firms

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15
Q

increasing cost

A

production cost rise as the market expands

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16
Q

constant costs are most

A

common and clearest result

17
Q

consumer sovereignty

A

the consumer has some controlling power over goods that are produced and the consumer is the best judge of their own welfare