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Microeconomics > Chapter 7: MARKET STRUCTURES, PERFECT COMPETITION, + LONG RUN SUPPLY > Flashcards

Chapter 7: MARKET STRUCTURES, PERFECT COMPETITION, + LONG RUN SUPPLY Flashcards

1
Q

A market is more concentrated when there are fewer firms competing in it; the concentration is lower when there are more firms

A

industry concentration

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2
Q

The phenomenon in which the amount of time required to complete a task reduces as you gain experience; corresponds to a downward-sloping average cost curve

A

learning by doing

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3
Q

When a firm creates a new market with new goods (e.g., Apple’s iPhone)

A

market making

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4
Q

Goods, services, and capital are being allocated in the best way possible on the production possibility frontier (PPF)

A

allocative efficiency

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5
Q

Occurs at maximum efficiency when it is impossible to make one party better off without making someone worse off

A

pareto efficiency

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6
Q

An outcome where at least one person could be better off without making anyone else worse off

A

pareto-superior outcome

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7
Q

Goods are being produced at the lowest cost of production

A

productive efficiency

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8
Q

Expanding all inputs proportionately does not change the average cost of production

A

constant returns to scale

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9
Q

Resources that firms use to produce their products, for example, labor and capital

A

factors of production (or inputs)

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10
Q

Factors of production that can’t be easily increased or decreased in a short period of time

A

fixed inputs

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11
Q

Period of time during which all of a firm’s inputs are variable

A

long run

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12
Q

The gap between average variable costs and average total costs

A

average fixed cost

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13
Q

Profit divided by the quantity of output produced; also known as profit margina

A

average profit

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14
Q

Total cost divided by the quantity of output

A

average total cost

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15
Q

Variable cost divided by the quantity of output; total costs - fixed costs / quantity of output

A

average variable cost

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16
Q

Level of output where the marginal cost curve intersects the average cost curve at the minimum point of AC; if the price is at this point, the firm is earning zero economic profits

A

break even point

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17
Q

General rule that as a firm employs more labor, eventually the amount of additional output produced declines

A

diminishing marginal productivity

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18
Q

Level of output where the marginal cost curve intersects the average variable cost curve at the minimum point of AVC; if the price is below this point, the firm should shut down immediately

A

shutdown point

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19
Q

The horizontal sum of all the supply curves for the many firms in a perfectly competitive industry

A

total supply in the industry

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20
Q

A firm in a perfectly competitive market that must take the prevailing market price as given; a firm that takes the constant price as given where demand intersects with supply

A

price taker

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21
Q

Change in total cost divided by change in quantity; the change in total cost for a unit change in output (the slope of the total cost curve); the additional cost of producing one more unit

A

marginal cost

22
Q

Total revenues minus explicit costs, including depreciation

A

accounting profit

23
Q

Total revenue divided by the quantity of output; equal to the price a firm charges for its goods

A

average revenue

24
Q

Cost of the fixed inputs; expenditure that a firm must make before production starts and that does not change regardless of the production level

A

fixed cost

25
Q

The additional revenue gained from selling one more unit; the change in total revenue for a unit change in output (the slope of the total revenue curve); mr(qi) = ΔR/Δqi

A

marginal revenue

26
Q

A market structure in which firms are producing differentiated goods in an industry; in these types of market structures, the firm has a downward-sloping demand curve and a downward-sloping marginal revenue curve (inside its demand curve)

A

monopolistic competition

27
Q

Price determined by the total output

A

p(Q)

28
Q

Any gap between the revenue and cost

A

profits

29
Q

The sum of every firm’s quantity in an industry; Q = q1 + q2 + … + qn

A

Q

30
Q

A firm’s output

A

qi

31
Q

Fixed costs + variable costs

A

total cost

32
Q

The price at which we sell a good multiplied by the quantity sold

A

total revenue

33
Q

Total revenues minus total costs (explicit plus implicit costs)

A

economic profit

34
Q

Goods that are in the same industry but that are different in some way; e.g., computers (Mac or PC), sodas (Coca Cola or Pepsi), fashion brands, car models

A

differentiated good

35
Q

The long-run process of firms entering an industry in response to industry profits

A

entry

36
Q

The long-run process of firms reducing production and shutting down in response to industry losses

A

exit

37
Q

An organization that combines inputs of labor, capital, land, and raw or finished component materials to produce outputs

A

firm

38
Q

A firm that is already in an industry

A

incumbent firm

39
Q

Period of time during which all of a firm’s inputs are variable

A

long run

40
Q

Where all firms earn zero economic profits producing the output level where P = MR - MC and P = (TR / TO) - AC

A

long-run equilibrium

41
Q

Result in an easy to enter industry

A

low barriers to entry

42
Q

The conditions in an industry, such as number of sellers, how easy or difficult it is for a new firm to enter, and the type of products that are sold

A

market structure

43
Q

One big firm makes up an industry

A

monopoly

44
Q

A few firms make up an industry

A

oligopoly

45
Q

Each firm faces many competitors that sell identical products

A

perfect competition

46
Q

The process of combining inputs to produce outputs, ideally of a value greater than the value of the inputs

A

production

47
Q

Obstacles such that an industry is difficult to enter

A

significant barriers to entry

48
Q

Defined by a specific set of characteristics/rules; the particular seller of these goods does not impact the quality or characteristics of the good (in a substantial way)

A

standardized or homogeneous good

49
Q

A firm’s shutdown point occurs where ______________.

A

Price equals average variable cost

50
Q

A firm’s profit margin is defined as ______________.

A

The difference between price and average cost at a given level of output

Microeconomics (13 decks)

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