7.4-1, 8.2-1, 8.1-1, 8.3-2, 8.3-3 Flashcards

1
Q

What are the fixed costs in the long run?

A

Their are no fixed costs or inputs in the long run. All inputs are variables

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2
Q

Labor-Intensive Technology

A

when a firm uses more labor (Workers) relative to capital (tools)

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3
Q

Capital-Intensive Technology

A

uses more capital (tools) relative to labor (workers)

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4
Q

Scale or Size of operation is a choice during the long or short run

A

Long Run. You cannot change the size of the operation during the short run, only add workers

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5
Q

Is the firm able to downsize in the long run?

A

Yes, the firm can downsize or grow in the long run. All inputs are variables

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6
Q

Long Run

A

A period of time in which there are no fixed inputs and no fixed costs. all inputs can be varied

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7
Q

A firm can choose either a capital-intensive technology or a labor-intensive technology in the _____ _____.

A

Long Run

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8
Q

In ____ _____, a firm can only add or eliminate labor

A

Short Run

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9
Q

Choice of Scale

A

a firm can choose to build new factories, open new offices, or close existing operations during the long run

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10
Q

Cost minimizing technique

A

the combination of labor and capital to produce output at the lowest cost

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11
Q

T/F: A wheat farm that uses migrant workers to plant and harvest the crops is capital-intensive?

A

False. This farm is labor-intensive

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12
Q

change in quantity demanded

A

a change in a good’s own price leads to a change in quantity demanded, a move along a given demand curve

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13
Q

competitive market

A

a market where the many buyers and sellers have little market power- each buyer’s or seller’s effect on market price is negligible

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14
Q

market

A

the process of buyers and sellers exchanging goods and services

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15
Q

market demand curve

A

the horizontal summation of individual demand curves

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16
Q

market supply curve

A

a graphical representation of the amount of goods and services that suppliers are willing and able to supply at various prices

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17
Q

individual demand curve

A

a graphical representation that shows the inverse relationship between price and quantity demanded

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18
Q

individual demand schedule

A

a schedule that shows the relationship between price and quantity demanded

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19
Q

Total Revenue

A

the price it charges for its product multiplied by the quantity of its products it sells ina given period.

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20
Q

Market Power

A

the ability to influence the price of your product

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21
Q

A firm has market power if it can…

A

raise the price of its product without losing all of its customers to a competitor. or can lower its product without attracting the entire market

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22
Q

Perfectly competitive

A

an industry is perfectly competitive if it’s made up of a large number of small firms each selling an identical product

23
Q

in a perfect competitive market a firm is going to have to price its product _________ the competition

A

Price their product right with the competition

24
Q

No barriers to entry

A

the firm can enter and exit whenever it likes

25
Q

P*

A

The market price or going equilibrium price

26
Q

In a perfect competition market a firm’s demand curve will be ___________ at the market equilibrium price

A

horizontal. The firm could make and sell all of the product they wanted at the market equilibrium price

27
Q

Any firms profit is:

A

the difference between total revenue and total cost

28
Q

T/F: Firms that can set the product prices alone are called “price takers”

A

False - Firms with market power, such as monopolies, can set the price of a product are referred to as “price setters”

29
Q

The competitive firm will not sell at a price lower than the market price because…

A

They can sell all they want at the market price

30
Q

A competitive firm cannot sell at a price _______ the market price because _____ will sell it at the market price and the original firm will not sell any of its product

A

at a price above market price because competition will sell it at market price.

31
Q

Price takers

A

a firm that have no market power and have to accept their product’s price as set by the market

32
Q

price setter

A

a firm with market power that can raise the price without losing all customers and lower price without attracting the entire market

33
Q

all firms sell identical products and customers do not distinguish between products in ___________ __________

A

perfect competition

34
Q

A firm that has ____ ____ is usually large relative to the size of the market

A

market power

35
Q

Competitive firm’s demand curve is a _______ ____ at the equilibrium price

A

horizontal line

36
Q

Profit is :

A

TR-TC and (PRICE x Q) - TC

37
Q

A firm is in a competitive market when:

A

it is both unable to influence the price of its product and the firm takes as given the price of its products set by supply and demand in the market

38
Q

Capital intensive

A

production that uses a large amount of capital

39
Q

labor intensive

A

production that uses a large amount of labor

40
Q

A profitable, competitive firm divides its total revenue (TR) between its:

A

variable cost (VC), it fixed costs (FC), and its profit

41
Q

marginal costs

A

cost of labor per output unit

42
Q

equilibrium quantity

A

the quantity at the intersection of the market supply and demand curves; at the equilibrium quantity, the quantity demanded equals the quantity supplied

43
Q

equilibrium price

A

the price at the intersection of the market supply and demand curves, at this price, the quantity demanded equals the quantity supplied

44
Q

shortage

A

a situation where quantity demanded exceeds quantity supplied

45
Q

surplus

A

a situation where quantity supplied exceeds the quantity demanded

46
Q

Total Revenue (TR)

A

TR= p *y or price and quantity sold

47
Q

to determine profitability, a competitive firm must compare its average total cost (ATC) to the product price (T/F)

A

True

48
Q

Total profit for a firm is:

A

total revenue minus total cost (pq - TC)

49
Q

a firm in a competitive market will try to produce the output level for which:

A

marginal cost equals marginal revenue

50
Q

a firm that produces output at the level where marginal cost (MC) equals price and MC is increasing will be profitable (T/F)

A

true

51
Q

in 2001, producing widgets cost the firm $100,000. THe firm sold the weidgets for $125,000. What was the firm’s profit or loss?

A

$25,000 profit

52
Q

rule for maximizing profit for a competitive firm

A

is the firm produces up to the point at which marginal cost equals price

53
Q

total revenue on a graph is representited as the:

A

area of the rectangle