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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
Q

In a competitive market equilibrium, _____ of goods and services are allocated among the most efficient producers.

A

production

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25
Q

_________ is associated with deviations from competitive market equilibrium.

A

Deadweight loss problem is associated with deviations from competitive market equilibrium.

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26
Q

________ 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.

A

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.

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27
Q

______ occurs when competitive market outcomes fail to sustain socially desirable activities or to eliminate undesirable ones.

A

Market failure occurs when competitive market outcomes fail to sustain socially desirable activities or to eliminate undesirable ones.

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28
Q

Differences between private and social costs or benefits are called ________.

A

Differences between private and social costs or benefits are called externalities.

29
Q

____________ is always a risk in markets where social values and social costs differ from the private costs and values of producers and consumers.

A

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
Q

Deadweight loss problem

A

Decline in social welfare due to competitive market distortion.

31
Q

Welfare loss triangle

A

Graphic representation of deadweight loss when linear supply and demand curves are employed.

32
Q

Market power

A

Ability to set prices and obtain above-normal profits for extnded periods

33
Q

Market failure

A

Situation when competitive market outcomes fail to efficiently allocate economic resources

34
Q

failure by market structure

A

situation when competitive markets malfunction because of market power

35
Q

Externalities

A

Uncompensated benefits or costs tied to production or consumption

36
Q

Failure by Incentive

A

Situation when competitive markets malfunction because of externalities.

37
Q

Economic Efficiency

A

Least-cost production of desired goods and services

38
Q

Economic Regulation

A

Government control of production and/or consumption

39
Q

Social Equity

A

Fairness

40
Q

Consumer Sovereignty

A

Individual control over economic decisions

41
Q

Unit Concentration

A

Restrict economic and political power.

42
Q

Subsidy Policy

A

Government support strategy

43
Q

Tradable Emission Permits

A

Transferable pollution licenses

44
Q

Deadweight Loss of Taxation

A

Decline in social welfare due to decline in economic activity caused by taxes

45
Q

Tax Incidence

A

Point of tax collection

46
Q

Tax Burden

A

Economic hardship due to tax

47
Q

Price Floor

A

Minimum price

48
Q

Price Ceiling

A

Maximum price

49
Q

Return on Stockholders’ Equity (ROE)

A

Net income divided by the book value of total assets minus total liabilities

50
Q

Profit Margin

A

Net income expressed as a percentage of sales revenue

51
Q

Total Asset Turnover

A

Sales revenue divided by the book value of total assets

52
Q

Leverage

A

Ratio of total assets divided by stockholders’ equity

53
Q

Reversion to the Mean

A

Tendency of firm profit rates to converge over time toward long-term averages

54
Q

Disequilibrium Profits

A

Short-term economic profits prior to long-term market adjustment

55
Q

Disequilibrium Losses

A

Below-normal returns suffered in the short run prior to long-term market adjustment

56
Q

Economic Luck

A

Temporary good fortune due to some unexpected change in industry demand or cost conditions

57
Q

Competitive Strategy

A

Search for a durable advantage over competitors

58
Q

Economic Rents

A

Profits due to uniquely productive inputs

59
Q

Monopoly

A

A market structure characterized by a single seller of a highly differentiated product

60
Q

Price Makers

A

Buyers and sellers whose large transactions affect market prices.

61
Q

Monopoly Underproduction

A

Tendency for monopoly firms to restrict output to increase prices and earn economic profits

62
Q

Deadweight Loss From

A

Decline in social welfare due to the drop in mutually

63
Q

Monopoly Problem

A

beneficial trade activity caused by monopoly

64
Q

Wealth transfer problem

A

An unwarranted transfer of wealth measured by the transformation of consumer surplus into producer surplus

65
Q

Natural Monopoly

A

Market in which the market-clearing price occurs at a point which the monopolist’s long-run average costs are still declining

66
Q

Patents

A

Explicit monopoly rights conferred by public policy

67
Q

Regulatory lag

A

Delay between when a change in regulation is appropriate and the date it becomes effective

68
Q

Oligopsony

A

Market demand dominated by a few buyers

69
Q

Monopsony

A

Market in which there is a single buyer of a desired product or input

70
Q

Monopsony Power

A

Ability to obtain prices below those that exist in a competitive market

71
Q

Bilateral Monopoly

A

Markets in which a monopsony buyer faces a monopoly seller

Mangerial Accounting (1 decks)

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