Class 1

Question 1

What does MC stand for?

Answer 1

Marginal Cost

Question 2

What does “AC” Stand for and what is the formula?

Answer 2

Average Cost- Equation is: Total Cost / Total Quantity

Question 3

What does Total Cost / Total Quantity equal?

Answer 3

Average Cost

Question 4

What does Pie mean?

Answer 4

Pie meants profits

Question 5

What is the Profit Model?

Answer 5

Pie = (PQ) - (ACQ) = (P-AC)*Q

Question 6

When does profit-maximizing occure?

Answer 6

When Marginal Revenue (MR) = Marginal Costs (MC)

Question 7

What are the X and Y axis for a demand curve?

Answer 7

Price (Y) and Quantity (X)

Question 8

A demand curve represents the relationship between…

Answer 8

the price charged and the quantity demanded

Question 9

The demand curve represents the distribution of…

Answer 9

the willingness to pay.

Question 10

What does “Fixed Costs” actually refer to?

Answer 10

Costs to produce like R&D costs. NOT ongoing costs to produce (double check this is right)

Question 11

What does Fixed Marginal Costs mean?

Answer 11

**GET ANSWER FROM FLORIAN

Question 12

What represent the parameters in a demand curve

Answer 12

“a” and “b”

Question 13

What do “a” and “b” stand for in the linear equation

Answer 13

a = y intercept and b = slope

Question 14

Constant Marginal Costs

Answer 14

**GET ANSWER FROM FLORIAN

Question 15

Marginal Revenue means…

Answer 15

the CHANGE in revenue as the quantity changes. (The change here can also be called the “______” )

Question 16

The Derivative in laymen’s teams means the…

Answer 16

Incremental CHANGE in either revenue or costs as the price and quantity change

Question 17

Strategic Action Variable refers to

Answer 17

The variable in the equation you are trying to isolate for CHECK WITH FLORIAN

Question 18

What do P* and quantity Q* refer to?

Answer 18

Optimal Price and Optimal Quantity

Question 19

Producer surplus meaning

Answer 19

**GET ANSWER FROM TA

Question 20

Deadweight Loss means

Answer 20

**GET ANSWER FROM TA

Question 21

“consumer surplus” refers to

Answer 21

The difference between what the higher price WTP and the lower price customers are being charged. That difference added up is the total consumer surplus. Basically richer people that would be willing to pay more for something, but the company isn’t able to charge them because then their overall demand would drop. Top portion of the demand curve