Chapter 22

Question 0

An input whose quantity used in the production process is determined by the quantity of goods and services produced

Answer 0

Variable input

Question 1

An input whose quantity used in the production process is a set amount in the production process regardless of hoe many goods or services are produced

Answer 1

Fixed input

Question 2

The value of the last unit added

Answer 2

Marginal value

Question 3

Resulting increase in output as a result of using additional inputs in a more efficient manner

Answer 3

Diminishing marginal product

Question 4

Any process by which resources are transformed into goods and services

Answer 4

Production

Question 5

At some point as equal units of input are added the increase in marginal output will decrease

Answer 5

DMP diminishing marginal product

Question 6

Marginal cost

Answer 6

Change in output

Question 7

Marginal cost

Answer 7

Marginal,production

Question 8

Refers to decreases in long-run average costs resulting from increases in output

Answer 8

Economies of scale

Question 9

Refers to increases in long-run average total costs resulting from increases in output

Answer 9

Diseconomies of scale

Question 10

Lowest possible output for which the firm reaches its lowest long-run average total cost

Answer 10

Minimum efficient scale

Question 11

What can be used to predict the likely market structure of a particular market

Answer 11

MES- minimum efficient scale

Question 12

Product that is exactly the same

Answer 12

Homogeneous product

Question 13

Producers have no ability to set price but must take price established by the market

Answer 13

Price taker

Question 14

Demand curve for a perfectly competitive industry

Answer 14

Horizontal line

Question 15

Characteristics of perfectly competitive firm

Answer 15

1. Large amount of buyers and sellers
2. Both buyers and sellers have access to the same information
3. Product is homogeneous
4. There are no barriers to entry
5. Producers are price takers

Question 16

Perfectly competitive market revenue is calculated

Answer 16

Total revenue = price x quantity

Question 17

marginal costs = marginal revenue

Answer 17

Profit maximization for every firm in the industry

Question 18

Return explicit and implicit costs and is a signal to others firms that entry into the market is a good thing

Answer 18

Economic profits

Question 19

MC = ATC = AR = P = d

Answer 19

Break even price

Question 20

Monopolist market structure

Answer 20

One seller
Absolute barriers of entry or exit
Unique product
Long-run economic profits

Question 21

Monopolistic competitive structure

Answer 21

Large number of sellers
Highly competitive
Products not identical-- not perfect substitution-considerable product differentiation
Easy entry no exit or entry barriers
Some price stating ability
No long economic profits

Question 22

A few sellers - large number of buyers
Sellers aware of competition
Substantial entry/exit barriers
Some price setting ability
Long run economic profits possible
Product differentiation continuous

Answer 22

Oligopoly market structure

Question 23

What kind of market is considered to be the most efficient for resource allocation?

Answer 23

Competitive markets- perfect competition