econ final

Question 1

Economies of scale

Answer 1

Average cost per unit of production decreases as the scale of production grows

Question 1

Diseconomies of scale

Answer 1

increasing production may lead to larger cost per unit of production

Question 2

Constant returns to scale

Answer 2

increasing scale of inputs results in a proportional increase in output

Question 3

diminish returns

Answer 3

adding more input such as labour to a fixed input leads to smaller and smaller increases in output

Question 4

How to profit maximize in a competitive market

Answer 4

MR=P

Question 5

Competitive markets

Answer 5

price takers
Many buyers and sellers
goods and services being sold are similar
businesses can easily enter and exit market in the long run

Question 6

Demand curve in a perfectly competitive market

Answer 6

perfectly elastic and horizontal

Question 7

MR>MC

Answer 7

Raise profits

Question 8

Profit maximized

Answer 8

MC=MR=P
Where price intercepts MC curve

Question 9

Cost curves

Answer 9

ATC u shaped
Marginal cost intersects with ATC at minimum average total cost
marginal cost will eventually increase as output increases

Question 10

Short run shutdown if competition

Answer 10

total revenue < variable cost
P<AVC

Question 11

Long run exit competition

Answer 11

total revenue<total cost
enter if oposite
P<ATC

Question 12

Competitive market enter

Answer 12

total revenue>total cost
P>ATC

Question 13

Do not enter and exit competitive market if

Answer 13

P=ATC

Question 14

Monopoly

Answer 14

they are price makers to increase quantity sold they must lower prices

Question 15

Monopolist increases production two factors affect revenue

Answer 15

1.Quantity affect one more unit sold total revenue will increase because since larger quantity is sold
2.price effect- to sell one more unit price must fall which will lower total revenue

Question 16

Monopolist profit maximized

Answer 16

MR=MC
P>MC=MR
do not have a supply curve
P=average revenue

Question 17

Socially efficient quantity monopoly

Answer 17

Where MC intersects demand curve at any quantity below this the value to buyers exceeds the marginal cost of producing so increasing output increases total surplus. Monopolies usually produce less than sociall optimal

Question 18

oligopoly

Answer 18

few sellers and few suppliers

Question 19

monopolist competition

Answer 19

Businesses supply products that are different in some way
three traits-many sellers entry and exit, product differentiation, each product is slightly different. Individuals have to believe its different but it does not have to be different

Question 20

How does a competitive monopoly differ from a competitive market and monopoly market

Answer 20

Competitive markets are price takers while comp monopoly is price maker
Monopoly does not have free entry and exit while a competitive monopoly has free entry and exit

Question 21

Profit maximization in a competitive monopoly

Answer 21

Find quantity where MR=MC
Use demand curve where highest price can be used at MC=MR

P>ATC making positive economic profit
P<ATC making negative economic profit
P=ATC making zero economic profit

Question 22

Two results from long run equilibrium in a competitive monopoly

Answer 22

-price greater than marginal cost (monopoly)
-price equals ATC like a competitive market
monopoly in the short run competitive in the long run

Question 23

Game theory

Answer 23

study if strategic decision making

Question 24

Nash equilibrium

Answer 24

Make decisions based off decisions other people made

Question 25

Dominant strategy

Answer 25

When make strategy that will benefit them no matter what the other people choose

Question 26

Value of marginal product of an input

Answer 26

the value of the additional output created by adding one more unit of input

Question 27

Labour of demand is

Answer 27

equal to the value of marginal product

Question 28

Factor markets when output price changes

Answer 28

the value of of marginal product of labour changes labour demand curve shifts left

Question 29

Output price factor market

Answer 29

marginal product x price of business output

Question 30

Technology change factor market

Answer 30

most technology is labour augmenting change shifts the labour demand curve right since it increases the value of marginal product
Some technological is labour saving because it lowers the marginal product of labour in this case technology is a replacement for workers