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Economics Term 1 Grade 11 > Dynamics of markets: relationship between markets > Flashcards

Dynamics of markets: relationship between markets Flashcards

1
Q

what is a market

A

can be identified as buyers/sellers who influence the price of a good/service

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2
Q

marginal cost (definition and formula)

A

amount by which the total cost increase when one extra unit of a product is produced
total cost (TR)/output(Q)=MC

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3
Q

marginal revenue (definition and formula)

A

refers to the extra amount of income earned when an additional unit of a product is sold
TR/Q=MR

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4
Q

average cost

A

fixed cost + variable cost = total cost
total cost/total output =AC
also called unit cost

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5
Q

Average revenue (definition and formula)

A

average rev refers to the amount the enterprise earns for every unit sold
TR/Q=AR

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6
Q

why does TR/Q=AR

A

cause TR=PQ
it follows that AR=PQ/Q
therefore AR=price

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7
Q

average variable cost

A

variable cost divided by number of units produced

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8
Q

price

A

a value that will purchase a definite quantity,weight, or other measure pf a good or service

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9
Q

quantity

A

the extent, size, or sum of countable or measurable discrete events, objects, or phenomenon as a numerical value

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10
Q

perfect competition

A

market structure with a large number of participants who are all price takers, there are no barriers to entry or exit barriers in the long run, and all info is available to both buyers and sellers and a product is sol

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11
Q

egs of perfect competition

A

stock exchange
foreign currency market
central grain market
market for agricultural produce

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12
Q

the point where the demand and supply curve meet is known as the..

A

market price

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13
Q

individual businesses are known as

A

price takers

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14
Q

the economic cost of production equals what

A

opportunity cost=explicit cost + implicit cost

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15
Q

explicit cost

A

the actual expenditure of a business on the purchase or hire of the inputs required for the production process.

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16
Q

egs of explici costs

A

wages
interest on borrowed capital
water
electrictiy

17
Q

implicit costs

A

the value of inputs that are owned by the entrepreneur and used in the production process

18
Q

egs of implicit costs

A

forfeited rent that could have been earned if the owner used his own building

forfeited interest earned if the owner invested his/her money

forfeited salary earned if the owner had worked elsewhere

19
Q

LEARN THE TABLE ON MARKET STRUCTURES

A

LEARN IT BUD

20
Q

normal profit

A

normal profit is the min earnings required to prevent the entrepreneur from closing the business

21
Q

economic profit

A

profit made in addition to normal profit

22
Q

what does economic profit equal

A

the difference between total revenue and total costs

23
Q

what does average variable cost (AVC) consist of

A

consists of per unit value

24
Q

what determines how much a business would produce at each price

A

the different market prices

25
Q

what does the production determine

A

the supply curve

26
Q

how is the market supply determined (with regard to the graphs)

A

the supply curves of all the businesses are added horizontally

27
Q

in the short term, what is the supply curve also called

A

the market supply curve

28
Q

what does the demand curve look like in a perfect market

A

always a perfectly horizontal demand curve

29
Q

what determines the market price

A

the industry

30
Q

why are individual businesses price takers

A

they can increase or decrease output in order to maximize profit

31
Q

where is profit maximized

A

where SMC=MR

32
Q

what determines the location and form of the supply curve

A

tech and the price of factors of production

33
Q

when is the industry in equilibrium

A

at a price that clears the market

34
Q

what is the result of economic profit

A

more businesses being attracted to the industry

35
Q

what are the 2 things that can change in the long run

A

new businesses can enter or leave the market

businesses can adjust their production capacity

36
Q

what does the adjustment process do when the market price is below the minimum point of the long-term average cost curve

A

the adjustment curve works the other way around

37
Q

what happens to price in the long term

A

under perfect competition the price of a product in the long-term will settle at a level that corresponds to the lowest point of the LAC curve

38
Q

when will there be no further entry or exit of businesses

A

once long-term equilibrium has been achieved and provided that there are no changes in the tech or factors of production

Economics Term 1 Grade 11 (6 decks)

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