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Hannah Brotherton > Blackstock test 2 microeconomics 202 > Flashcards

Blackstock test 2 microeconomics 202 Flashcards

1
Q

formula for total costs

A

total fixed costs + total variable costs = total costs

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2
Q

total fixed costs + total variable costs = ___ ___

A

total costs formula

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3
Q

fixed costs change from period to period. TF

A

F

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4
Q

fixed costs do not change from period to period. TF

A

T

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5
Q

fixed costs include ___ ___

A

opportunity costs

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6
Q

___ ___ include opportunity costs

A

fixed costs

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7
Q

if you’re earning an economic profit, you made the ___ choice and vice versa

A

right

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8
Q

if you’re earning an ___ ___, you made the right choice and vice versa

A

economic profit

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9
Q

the ___ you produce, the ___ your variable cost

A

more, higher

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10
Q

the more you ___, the higher your ___ ___

A

produce, variable cost

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11
Q

average total cost formula

A

ATC = AFC + AVC
OR
TC/Q = ATC

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12
Q

AFC + AVC = _____
OR
TC/Q = ____

A

average total cost

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13
Q

average variable cost formula

A

AVC = TVC/Q

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14
Q

TVC/Q = ____

A

AVC

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15
Q

Average fixed cost formula

A

TFC/Q

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16
Q

TFC/Q = ___

A

Average fixed cost

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17
Q

marginal cost formula

A

change in total cost / change in quantity

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18
Q

change in total cost / change in quantity

A

marginal cost formula

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19
Q

as quantity increases, average fixed cost approaches zero. TF

A

T

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20
Q

as quantity decreases, average fixed cost approaches zero. TF

A

F

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21
Q

as quantity increases, average total cost approaches zero. TF

A

F

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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

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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

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24
Q

average variable cost is “___” shaped because of the law of diminishing marginal production

A

U shaped

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25
Q

define monopoly

A

one seller of a good or service

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26
Q

one seller of a good or service

A

monopoly

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27
Q

define monopsony

A

one buyer of a good or service

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28
Q

one buyer of a good or service

A

monopsony

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29
Q

purely competitive market is defined by its four characteristics

A

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

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30
Q

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

A

purely competitive market

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31
Q

define demand facing the firm

A

how does the firm effect the overall world demand, in simple terms, it doesn’t.
-perfectly elastic

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32
Q

how does the firm effect the overall world demand, in simple terms, it doesn’t.
-perfectly elastic

A

demand facing the firm

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33
Q

what does “d” in the purely competitive market graph

A

demand facing the firm

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34
Q

what does “P” in the purely competitive market graph

A

price taker is the firm in a purely competitive market

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35
Q

what does “AR” in the purely competitive market graph

A

average revenue

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36
Q

what does “MR” in the purely competitive market graph

A

marginal revenue, we always refer to this line as marginal revenue

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37
Q

average total cost is tangent to marginal revenue at its ___ point

A

lowest

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38
Q

average total cost is tangent to ___ ___ at its lowest point

A

marginal revenue

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39
Q

average total cost is ___ to marginal revenue at its lowest point

A

tangent

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40
Q

___ ___ ___ is tangent to marginal revenue at its lowest point

A

average total cost

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41
Q

Marginal cost crosses ___ ___ ___ and average variable cost at their lowest points

A

average total cost

42
Q

Marginal cost crosses average total cost and ___ ___ ___ at their lowest points

A

average variable cost

43
Q

___ ___ crosses average total cost and average variable cost at their lowest points

A

marginal cost

44
Q

Marginal cost crosses average total cost and average variable cost at their ___ points

A

lowest

45
Q

the distance between average total cost and average variable cost at any given point is the ___ ___ ___

A

average fixed cost

46
Q

the distance between average total cost and ___ ___ ___ at any given point is the average fixed cost

A

average variable cost

47
Q

the distance between ___ ___ ___ and average variable cost at any given point is the average fixed cost

A

average total cost

48
Q

where will every firm operate in order to maximize profits?

A

where marginal cost = marginal revenue

49
Q

pi = …

A

Total revenue - total cost

50
Q

in economics, pi stands for ____

A

profit

51
Q

finish this…
a firm will hire workers

A

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
Q

total costs formula

A

total costs = total fixed costs + total variable costs

53
Q

total fixed costs + total variable costs

A

total costs formula

54
Q

when TC and TR equal each other and the economic profit is zero…

A

operating your business makes you no better off than had you accepted the next best alternative

55
Q

operating your business makes you no better off than had you accepted the next best alternative

A

when TC and TR equal each other and the economic profit is zero

56
Q

define zero economic profit

A

when ATC is tangent to MR at ATC’s lowest point

57
Q

ATC is tangent to MR at ATC’s lowest point

A

zero economic profit

58
Q

zero economic profit can get you earning a normal rate of return on your investment. TF

A

T

59
Q

zero economic profit can get you earning a progressed rate of return on your investment. TF

A

F

60
Q

zero economic profit can get you losing a normal rate of return on your investment. TF

A

F

61
Q

define long run

A

a time period long enough that all factors of productions can be changed

62
Q

a time period long enough that all factors of productions can be changed

A

long run

63
Q

define short run

A

a time period short enough that at least one factor of production can’t be changed

64
Q

a time period short enough that at least one factor of production can’t be changed

A

short run

65
Q

if price lies between minimum ATC and minimum AVC, the firm will continue to operate. Long or short run?

A

short run

66
Q

if price falls below minimum ATC, the firm will shut down. Long or short run?

A

both :)

67
Q

the firm’s short-run supply curve is from…

A

where MC and AVC cross and anywhere above

68
Q

…where MC and AVC cross and anywhere above.

A

the firm’s short-run supply curve is from…

69
Q

classic monopoly def

A

the downward sloping marginal revenue line, making them a price searcher

70
Q

the downward sloping marginal revenue line, making them a price searcher

A

classic monopoly

71
Q

schumpeterian monopoly def

A

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
Q

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

A

schumpeterian monopoly

73
Q

tullockian monopoly def

A

the only way a monopoly can operate today is if the government makes the competition illegal

74
Q

the only way a monopoly can operate today is if the government makes the competition illegal

A

tullockian monopoly

75
Q

Monopolistically competitive market is defined by its 4 characteristics

A
  1. larger number of buyers and sellers
  2. perfect information
  3. free entry and exit
  4. Heterogeneous goods (consumers can tell the difference)
76
Q
  1. larger number of buyers and sellers
  2. perfect information
  3. free entry and exit
  4. Heterogeneous goods (consumers can tell the difference)
A

Monopolistically competitive market is defined by its 4 characteristics

77
Q

Advertising does 2 things, what are they?

A
  1. increases demand
  2. makes demand more inelastic
78
Q
  1. increases demand
  2. makes demand more inelastic
A

Advertising

79
Q

define oligopoly

A

a market structure in which only a few sellers offer similar or identical products

80
Q

a market structure in which only a few sellers offer similar or identical products

A

oligopoly

81
Q

define cartel

A

a group of firms who come together and ACT like a monopoly

82
Q

a group of firms who come together and ACT like a monopoly

A

cartel

83
Q

participating in a cartel is called a ___

A

collusion

84
Q

participating in a ___ is called a collusion

A

cartel

85
Q

a collusion is legal. TF

A

F

86
Q

a collusion is illegal. TF

A

T

87
Q

define Nash Equilibrium

A

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
Q

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

A

Nash equilibrium

89
Q

the ___ price is less than the ___ price, but greater than the ____ price

A

oligopoly, monopolistic, competitive

90
Q

the oligopoly price is ___ than the monopolistic price, but ___ than the competitive price

A

less, greater

91
Q

what’s the world’s most successful cartel?

A

OMEC (organization of petroleum exporting company)
-HQ is in Vienna, Austria

92
Q

explain the “prisoner’s dilemma”

A
  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
Q

define dominant strategy

A

a strategy that is best for a player in a game regardless of the strategies chosen by the other players

94
Q

a strategy that is best for a player in a game regardless of the strategies chosen by the other players

A

dominant strategy

95
Q

define benefits principle

A

people should be taxed based on the government services they receive

96
Q

people should be taxed based on the government services they receive

A

benefits principle

97
Q

define ability to pay

A

taxes should be levied on a person according to how well that person can shoulder the burden

98
Q

taxes should be levied on a person according to how well that person can shoulder the burden

A

ability to pay

99
Q

define horizontal

A

taxpayers with similar abilities to pay taxes should pay the same amount

100
Q

taxpayers with similar abilities to pay taxes should pay the same amount

A

horizontal

101
Q

define vertical

A

taxpayers with a greater ability to pay taxes should pay larger amounts

Hannah Brotherton (18 decks)

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