Blackstock test 2 microeconomics 202 Flashcards
1
Q
formula for total costs
A
total fixed costs + total variable costs = total costs
2
Q
total fixed costs + total variable costs = ___ ___
A
total costs formula
3
Q
fixed costs change from period to period. TF
A
F
4
Q
fixed costs do not change from period to period. TF
A
T
5
Q
fixed costs include ___ ___
A
opportunity costs
6
Q
___ ___ include opportunity costs
A
fixed costs
7
Q
if you’re earning an economic profit, you made the ___ choice and vice versa
A
right
8
Q
if you’re earning an ___ ___, you made the right choice and vice versa
A
economic profit
9
Q
the ___ you produce, the ___ your variable cost
A
more, higher
10
Q
the more you ___, the higher your ___ ___
A
produce, variable cost
11
Q
average total cost formula
A
ATC = AFC + AVC
OR
TC/Q = ATC
12
Q
AFC + AVC = _____
OR
TC/Q = ____
A
average total cost
13
Q
average variable cost formula
A
AVC = TVC/Q
14
Q
TVC/Q = ____
A
AVC
15
Q
Average fixed cost formula
A
TFC/Q
16
Q
TFC/Q = ___
A
Average fixed cost
17
Q
marginal cost formula
A
change in total cost / change in quantity
18
Q
change in total cost / change in quantity
A
marginal cost formula
19
Q
as quantity increases, average fixed cost approaches zero. TF
A
T
20
Q
as quantity decreases, average fixed cost approaches zero. TF
A
F
21
Q
as quantity increases, average total cost approaches zero. TF
A
F
22
Q
define The law of diminishing marginal production
A
a situation in which adding more and more of a variable input to a fixed plant results in smaller and smaller amounts of additional output produced
23
Q
a situation in which adding more and more of a variable input to a fixed plant results in smaller and smaller amounts of additional output produced
A
The law of diminishing marginal production
24
Q
average variable cost is “___” shaped because of the law of diminishing marginal production
A
U shaped
25
define monopoly
one seller of a good or service
26
one seller of a good or service
monopoly
27
define monopsony
one buyer of a good or service
28
one buyer of a good or service
monopsony
29
purely competitive market is defined by its four characteristics
1) large number of buyers and sellers
2) perfect information (everyone has the same info and it is reliable and accurate, and without any hidden agendas)
3) free entry and exit
4) homogeneous goods (where consumers can't tell the difference
30
what are these characteristics of?
1) large number of buyers and sellers
2) perfect information (everyone has the same info and it is reliable and accurate, and without any hidden agendas)
3) free entry and exit
4) homogeneous goods (where consumers can't tell the difference
purely competitive market
31
define demand facing the firm
how does the firm effect the overall world demand, in simple terms, it doesn't.
-perfectly elastic
32
how does the firm effect the overall world demand, in simple terms, it doesn't.
-perfectly elastic
demand facing the firm
33
what does "d" in the purely competitive market graph
demand facing the firm
34
what does "P" in the purely competitive market graph
price taker is the firm in a purely competitive market
35
what does "AR" in the purely competitive market graph
average revenue
36
what does "MR" in the purely competitive market graph
marginal revenue, we always refer to this line as marginal revenue
37
average total cost is tangent to marginal revenue at its ___ point
lowest
38
average total cost is tangent to ___ ___ at its lowest point
marginal revenue
39
average total cost is ___ to marginal revenue at its lowest point
tangent
40
___ ___ ___ is tangent to marginal revenue at its lowest point
average total cost
41
Marginal cost crosses ___ ___ ___ and average variable cost at their lowest points
average total cost
42
Marginal cost crosses average total cost and ___ ___ ___ at their lowest points
average variable cost
43
___ ___ crosses average total cost and average variable cost at their lowest points
marginal cost
44
Marginal cost crosses average total cost and average variable cost at their ___ points
lowest
45
the distance between average total cost and average variable cost at any given point is the ___ ___ ___
average fixed cost
46
the distance between average total cost and ___ ___ ___ at any given point is the average fixed cost
average variable cost
47
the distance between ___ ___ ___ and average variable cost at any given point is the average fixed cost
average total cost
48
where will every firm operate in order to maximize profits?
where marginal cost = marginal revenue
49
pi = ...
Total revenue - total cost
50
in economics, pi stands for ____
profit
51
finish this...
a firm will hire workers
a firm will hire workers (or add inputs) as long as the last worker hired brings more money to the firm than it costs to hire him
52
total costs formula
total costs = total fixed costs + total variable costs
53
total fixed costs + total variable costs
total costs formula
54
when TC and TR equal each other and the economic profit is zero...
operating your business makes you no better off than had you accepted the next best alternative
55
operating your business makes you no better off than had you accepted the next best alternative
when TC and TR equal each other and the economic profit is zero
56
define zero economic profit
when ATC is tangent to MR at ATC's lowest point
57
ATC is tangent to MR at ATC's lowest point
zero economic profit
58
zero economic profit can get you earning a normal rate of return on your investment. TF
T
59
zero economic profit can get you earning a progressed rate of return on your investment. TF
F
60
zero economic profit can get you losing a normal rate of return on your investment. TF
F
61
define long run
a time period long enough that all factors of productions can be changed
62
a time period long enough that all factors of productions can be changed
long run
63
define short run
a time period short enough that at least one factor of production can't be changed
64
a time period short enough that at least one factor of production can't be changed
short run
65
if price lies between minimum ATC and minimum AVC, the firm will continue to operate. Long or short run?
short run
66
if price falls below minimum ATC, the firm will shut down. Long or short run?
both :)
67
the firm's short-run supply curve is from...
where MC and AVC cross and anywhere above
68
...where MC and AVC cross and anywhere above.
the firm's short-run supply curve is from...
69
classic monopoly def
the downward sloping marginal revenue line, making them a price searcher
70
the downward sloping marginal revenue line, making them a price searcher
classic monopoly
71
schumpeterian monopoly def
building the better product and selling it for the cheapest price, but they are transitive, so someone will eventually come along and build a better product
72
building the better product and selling it for the cheapest price, but they are transitive, so someone will eventually come along and build a better product
schumpeterian monopoly
73
tullockian monopoly def
the only way a monopoly can operate today is if the government makes the competition illegal
74
the only way a monopoly can operate today is if the government makes the competition illegal
tullockian monopoly
75
Monopolistically competitive market is defined by its 4 characteristics
1. larger number of buyers and sellers
2. perfect information
3. free entry and exit
4. Heterogeneous goods (consumers can tell the difference)
76
1. larger number of buyers and sellers
2. perfect information
3. free entry and exit
4. Heterogeneous goods (consumers can tell the difference)
Monopolistically competitive market is defined by its 4 characteristics
77
Advertising does 2 things, what are they?
1. increases demand
2. makes demand more inelastic
78
1. increases demand
2. makes demand more inelastic
Advertising
79
define oligopoly
a market structure in which only a few sellers offer similar or identical products
80
a market structure in which only a few sellers offer similar or identical products
oligopoly
81
define cartel
a group of firms who come together and ACT like a monopoly
82
a group of firms who come together and ACT like a monopoly
cartel
83
participating in a cartel is called a ___
collusion
84
participating in a ___ is called a collusion
cartel
85
a collusion is legal. TF
F
86
a collusion is illegal. TF
T
87
define Nash Equilibrium
a situation in which economic actors interacting with one another each choose their best strategy given the strategies that all the other actors have chosen
88
a situation in which economic actors interacting with one another each choose their best strategy given the strategies that all the other actors have chosen
Nash equilibrium
89
the ___ price is less than the ___ price, but greater than the ____ price
oligopoly, monopolistic, competitive
90
the oligopoly price is ___ than the monopolistic price, but ___ than the competitive price
less, greater
91
what's the world's most successful cartel?
OMEC (organization of petroleum exporting company)
-HQ is in Vienna, Austria
92
explain the "prisoner's dilemma"
1. both keep quiet and each do 1 year
2. speak on your partner, you go free and partner does 20 years
3. both confess, both go 8 years
93
define dominant strategy
a strategy that is best for a player in a game regardless of the strategies chosen by the other players
94
a strategy that is best for a player in a game regardless of the strategies chosen by the other players
dominant strategy
95
define benefits principle
people should be taxed based on the government services they receive
96
people should be taxed based on the government services they receive
benefits principle
97
define ability to pay
taxes should be levied on a person according to how well that person can shoulder the burden
98
taxes should be levied on a person according to how well that person can shoulder the burden
ability to pay
99
define horizontal
taxpayers with similar abilities to pay taxes should pay the same amount
100
taxpayers with similar abilities to pay taxes should pay the same amount
horizontal
101
define vertical
taxpayers with a greater ability to pay taxes should pay larger amounts
