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Mangerial Accounting > Chapter 11 - Performance and Strategy in Competitive Markets > Flashcards

Chapter 11 - Performance and Strategy in Competitive Markets Flashcards

0
Q

The study of how the allocation of economic resources affects the material well-being of consumers and producers is called ___________

A

welfare economics

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1
Q

What is Welfare Economics?

A

The study of how the allocation of economic resources affects the material well-being of consumers and producers.

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2
Q

The study of how the allocation of _____ ______ affects the material well-being of consumers and producers is called welfare economics.

A

economic resources

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3
Q

What is the material well-being of society?

A

Social welfare

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4
Q

Social welfare is ?

A

the material well-being of society.

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5
Q

_________ is the amount that consumers are willing to pay for a given good or service minus the amount that they are required to pay.

A

Consumer surplus

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6
Q

What is Consumer surplus?

A

The amount that consumers are willing to pay for a given good or service minus the amount that they are required to pay.

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7
Q

What describes the net benefit derived by consumers from consumption, where net benefit is measured in the eyes of the consumer?

A

Consumer surplus

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8
Q

Consumer surplus is closely related to the _____ curve.

A

demand

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9
Q

Producer surplus is closely related to the ______ curve

A

supply

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10
Q

What is closely related to the supply curve?

A

Producer surplus is closely related to the supply curve

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11
Q

What is closely related to the demand curve?

A

Consumer surplus

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12
Q

In a competitive market, the long-run market supply curve reflects the marginal cost of production so long as __________ are greater than average total cost.

A

In a competitive market, the long-run market supply curve reflects the marginal cost of production so long as marginal costs are greater than average total cost.

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13
Q

In a competitive market, the long-run market supply curve reflects the marginal cost of production so long as marginal costs are greater than ________.

A

In a competitive market, the long-run market supply curve reflects the marginal cost of production so long as marginal costs are greater than average total cost.

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14
Q

As long as marginal costs are greater than average total cost in a competitive market, the long-run market supply curve reflects the ______________.

A

marginal cost of production

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15
Q

The market supply curve indicates what?

A

The market supply curve indicates the minimum price required by sellers as a group to bring forth production, and the height of the market supply curve measures minimum production cost at each activity level.

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16
Q

The market supply curve indicates what?

A

the minimum price required by sellers as a group to bring forth production.

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17
Q

The height of the market supply curve measures what?

A

minimum production cost at each activity level.

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18
Q

The amount paid to sellers above and beyond the required minimum is called what?

A

Producer surplus

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19
Q

Producer surplus is ?

A

The amount paid to sellers above and beyond the required minimum.

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20
Q

Producer surplus is the __________ derived by producers from production.

A

net benefit

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21
Q

The net benefit derived by producers from production.

A

Producer surplus

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22
Q

In a competitive market equilibrium, _________ is measured by the sum of net benefits derived by consumers and producers.

A

social welfare

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23
Q

In a competitive market equilibrium, __________ are allocated to consumers who place highest value upon them.

A

goods and services

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24
In a competitive market equilibrium, _____ of goods and services are allocated among the most efficient producers.
production
25
_________ is associated with deviations from competitive market equilibrium.
Deadweight loss problem is associated with deviations from competitive market equilibrium.
26
________ is reflected in the ability of sellers to restrict output below competitive norms and their ability to obtain above-normal prices and profits for extended periods.
Market power is reflected in the ability of sellers to restrict output below competitive norms and their ability to obtain above-normal prices and profits for extended periods.
27
______ occurs when competitive market outcomes fail to sustain socially desirable activities or to eliminate undesirable ones.
Market failure occurs when competitive market outcomes fail to sustain socially desirable activities or to eliminate undesirable ones.
28
Differences between private and social costs or benefits are called ________.
Differences between private and social costs or benefits are called externalities.
29
____________ is always a risk in markets where social values and social costs differ from the private costs and values of producers and consumers.
Failure by incentive is always a risk in markets where social values and social costs differ from the private costs and values of producers and consumers.
30
Deadweight loss problem
Decline in social welfare due to competitive market distortion.
31
Welfare loss triangle
Graphic representation of deadweight loss when linear supply and demand curves are employed.
32
Market power
Ability to set prices and obtain above-normal profits for extnded periods
33
Market failure
Situation when competitive market outcomes fail to efficiently allocate economic resources
34
failure by market structure
situation when competitive markets malfunction because of market power
35
Externalities
Uncompensated benefits or costs tied to production or consumption
36
Failure by Incentive
Situation when competitive markets malfunction because of externalities.
37
Economic Efficiency
Least-cost production of desired goods and services
38
Economic Regulation
Government control of production and/or consumption
39
Social Equity
Fairness
40
Consumer Sovereignty
Individual control over economic decisions
41
Unit Concentration
Restrict economic and political power.
42
Subsidy Policy
Government support strategy
43
Tradable Emission Permits
Transferable pollution licenses
44
Deadweight Loss of Taxation
Decline in social welfare due to decline in economic activity caused by taxes
45
Tax Incidence
Point of tax collection
46
Tax Burden
Economic hardship due to tax
47
Price Floor
Minimum price
48
Price Ceiling
Maximum price
49
Return on Stockholders' Equity (ROE)
Net income divided by the book value of total assets minus total liabilities
50
Profit Margin
Net income expressed as a percentage of sales revenue
51
Total Asset Turnover
Sales revenue divided by the book value of total assets
52
Leverage
Ratio of total assets divided by stockholders' equity
53
Reversion to the Mean
Tendency of firm profit rates to converge over time toward long-term averages
54
Disequilibrium Profits
Short-term economic profits prior to long-term market adjustment
55
Disequilibrium Losses
Below-normal returns suffered in the short run prior to long-term market adjustment
56
Economic Luck
Temporary good fortune due to some unexpected change in industry demand or cost conditions
57
Competitive Strategy
Search for a durable advantage over competitors
58
Economic Rents
Profits due to uniquely productive inputs
59
Monopoly
A market structure characterized by a single seller of a highly differentiated product
60
Price Makers
Buyers and sellers whose large transactions affect market prices.
61
Monopoly Underproduction
Tendency for monopoly firms to restrict output to increase prices and earn economic profits
62
Deadweight Loss From
Decline in social welfare due to the drop in mutually
63
Monopoly Problem
beneficial trade activity caused by monopoly
64
Wealth transfer problem
An unwarranted transfer of wealth measured by the transformation of consumer surplus into producer surplus
65
Natural Monopoly
Market in which the market-clearing price occurs at a point which the monopolist's long-run average costs are still declining
66
Patents
Explicit monopoly rights conferred by public policy
67
Regulatory lag
Delay between when a change in regulation is appropriate and the date it becomes effective
68
Oligopsony
Market demand dominated by a few buyers
69
Monopsony
Market in which there is a single buyer of a desired product or input
70
Monopsony Power
Ability to obtain prices below those that exist in a competitive market
71
Bilateral Monopoly
Markets in which a monopsony buyer faces a monopoly seller

Mangerial Accounting (1 decks)

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