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BMGT 21 FINALS > FINALS > Flashcards

FINALS Flashcards

1
Q

Creation of goods and services
Converts natural resources to products

A

Production

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2
Q

Natural Resources is equal to what?

A

Finished Goods

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3
Q

What are the 5 M’s?

A

Manpower, Money, Machine, Materials, Method

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4
Q

What are the Factors of Production?

A

Land, Labor, Capital, Entrepreneur

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5
Q

Plant size and the efficiency of its resources, functional relation between inputs and ouputs.

Shows maximum number of outputs can be produced with a given labor or capital

Resources are fixed in the short run

If the plant size and resources change in the long run so is the production capacity.

A

Production Function

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6
Q

Do not change as output increased or decreased
ex. offices, factories, machinery, computer systems

A

Fixed Factor Inputs

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7
Q

You can change to change output
ex. labor, raw materials used in production

A

Variable Factor Inputs

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8
Q

can increase output w/used of limited stock of inputs.

A

Very Short Run

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9
Q

Can increase input by using more variable such as hiring workers at least one factor of production is fixed

A

Short run

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10
Q

increase its scale of operations
no fixed factors, all variables

A

Long Run

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11
Q

there is a significant change in the technology

A

Very Long Run

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12
Q

output per unit of the variable inputs

A

Average Product or AP

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13
Q

What is the formula of AP?

A

AP=Q/I
AP= AVERAGE PRODUCT
Q= TOTAL PRODUCT/OUTPUT
I=RESOURCE INPUT

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14
Q

change in output because of additional input

A

MARGINAL PRODUCT

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15
Q

What is the formula of Marginal Product?

A

MP=∆Q/∆I

MP= MARGINAL PRODUCT
Q=TOTAL PRODUCT/OUTPUT
I=RESOURCE INPUT
∆= CHANGES IN

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16
Q

What are the 3 stages of production?

A

Increasing Returns
Diminishing Returns
Negative

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17
Q

adding more variable factors, will used fixed factors, increase production

A

Increasing Returns

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18
Q

another adding more variable factors, overall output starts to diminish

A

Diminishing Returns

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19
Q

excessively adding variable factors, negative return of production

A

Negative

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20
Q
  • It is the used of variable factors against the limits of fixed factors
  • size of resource should not go beyond its product-maximizing point
  • plant capacity can only increase if there is a change in technology
A

The Law of Diminishing Returns

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21
Q
  • illustrates more dynamically how plant sizes and combinations of resources determined different levels of resource efficiency.
A

ISOQUANT- ISOCOST MODEL

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22
Q

Combination of factors that can produce output
Less capital, more labor

A

ISOQUANT (what can be produced)

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23
Q

How much of one resource is given up using additional units

Amount of a good that a consumer is willing to consume compared to another good, as long as the new good is equally satisfying

A

Marginal Rate of Substitution

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24
Q

What is the formula for Marginal Rate Substitution?

A

MRS=∆capital/∆labor

∆=change in

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25
Q

infinite combinations of production resources with a given budget

A

ISOCOST

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26
Q

different levels of resource inputs and plant capacity
- infinite number of isoquants, infinite level of plant capacity

A

HIERARCHY OF ISOQUANT

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27
Q

different budget and cost levels
- infinite combinations of production resources with a given budget

A

HIERARCHY OF ISOCOST

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28
Q

equi marginal condition of consumer’s behavior
- favors use cheaper & more efficient inputs to maximize production

A

OPTIMUM RESEARCH COMBINATION

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29
Q

how much of 1 resource is used per unit of the other.
- optimum changes with relative resource price and efficiency.

A

RESOURCE MIX OR COMBINATION

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30
Q

power of inputs to produce

A

PRODUCTIVITY

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31
Q

productivity improvement and alter the optimum combination of resources

A

RELATIVE RESOURCE EFFICIENCY

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32
Q

measures how output changes relative to resource inputs in the long run
- variation or change in productivity that is outcome from the increase of all the input

A

Return to scale of productivity

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33
Q

equal, increasing input, increasing output

A

CONSTANT RETURN SCALE

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34
Q

Output is less, input increase

A

DECREASING RETURN SCALE

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35
Q

Output increase than input resources

A

Increasing return scale

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36
Q

What is the formula for Profit?

A

Cost-Revenue

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37
Q

value of money that has been used up in production

A

Cost

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38
Q

Machine, Land, Equipment

A

Real Assets

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39
Q

Form of Money

A

Money Assets

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40
Q

forgone benefit from an option not chosen

A

Opportunity Cost

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41
Q

cost that is incurred by virtue of using an asset instead of investing it

A

Imputed Cost

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42
Q

direct and indirect costs that are used in production

A

Production Cost

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43
Q

constant in any production level

A

Fixed Cost

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44
Q

change based on production level

A

Variable Costs

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45
Q

cost per unit of output

A

Average Costs

46
Q

change in total cost because of additional unit produced

A

Marginal Cost

47
Q

short-run cost functions since plant size and capacity are fixed

A

COST OUTPUT IN THE SHORT RUN

48
Q

overall level of the Average Total Cost, plant size expands in the long run

A

Cost output in the long run

49
Q

Variations of products or with lose substitutes

A

Product Differentiation

50
Q

features, materials, design

A

Real Differences

51
Q

Advertising, promoting

A

Imaginary Differences

52
Q

change in total cost because of additional unit produced

A

Marginal Cost

53
Q

surplus of income over the expenses

A

Profit

54
Q

When Total Revenue is equal to Total cost

A

Break Even Point

55
Q

difference between the net income and opportunity cost

A

Economic Profit

56
Q

What is the formula of economic profit?

A

Total Revenue – Total Cost including implicit and explicit cost

57
Q

measuring the GNP and GDP by adding the total gross value added of agriculture, manufacturing/industrial, and services.

A

Value Added Approach

58
Q

What is the formula of Total Value Added?

A

Gross Value output - Value of Intermediate Consumption

59
Q

What is the formula for Measures GDP?

A

Gross value added of agriculture + gross value added of industry + gross value added of services

60
Q

What is the formula for Measures Growth Rate?

A

GDPyear2 - GDPyear1/GDPyear1 x 100

61
Q

What is under the 2 sector model?

A

Household and businesses

62
Q

What is under the 3 sector model?

A

Household and businesses

63
Q

What is under the 4 sector model?

A

Household, Business, Government

64
Q

What is under the 5 sector model

A

Household, Business

65
Q

What is under the Overseas Sector?

A

Government, Financial Sector, Foreign Sector

66
Q

market value of goods and services produced by a firm during one year

A

Value Output

67
Q

measurement of country’s total trade

A

Net Exports

68
Q

What is the formula for Net Exports?

A

Total Exports - Total Imports

69
Q

Total Market Value of nation’s economy

A

Gross National Product

70
Q

What is the formula of Gross National Product?

A

GNP = CONSUMPTION+ INVESTMENT + GOVERNMENT + NET EXPORT + NET FACTOR(GDP) + INCOME FROM ABROAD

71
Q

Monetary value in local currency

A

Gross Domestic Product

72
Q

What is the formula for Expenditure Approach?

A

GDP = CONSUMPTION+ INVESTMENT + GOVERNMENT + NET EXPORT

73
Q

What is the formula for Income Approach?

A

GDP = Net domestic product of factor cost + Indirect Taxes + Subsidiaries + Depreciation

74
Q

increase in economic productivity capacity

A

Economic Growth

75
Q

economic model shows how money/income flows through the different economic sectors.

A

Phases of Circular Flow of Income

76
Q

1st phase, firms produced outputs by taking help of factor services

A

Generation Phase

77
Q

2nd phase, wages, rent, interest, and profit flow from firms to households

A

Distribution Phase

78
Q

Last phase, income received by the factors of production that is spent on outputs produced

A

Disposition Phase

79
Q

Money Received, salary, Wages

A

Income

80
Q

studies the behavior of individuals and firms by making decisions

A

Microeconomics

81
Q

studies the whole performance of the economy

A

Macroeconomics

82
Q

What is the formula for Total Cost (TC)?

A

TC = TFC + TVC

83
Q

What is the formula of TOTAL FIXED COST (TFC)?

A

TFC = TC - TVC

84
Q

What is the formula of Total Variable Cost (TVC)?

A

TVC = TC - TFC

85
Q

What is the formula for Average Total Cost (ATC)?

A

ATC = TC/Q

86
Q

What is the formula for Average Fixed Cost (AFC)?

A

AFC = TFC/Q

87
Q

What is the formula for Average Variable Cost (AVC)?

A

AVC = TVC/Q

88
Q

What is the formula for Marginal Cost (MC)?

A

MC = TC2-TC1/Q2-Q1

89
Q

not profitable production , should cut down some of its production

A

Marginal Cost > Marginal Revenue

90
Q

profitable production, raise production

A

Marginal Cost < Marginal Revenue

91
Q

the company should keep the production constant

A

Marginal Cost = Marginal Revenue

92
Q

large number of buyers and sellers

         - freedom of entry and exit from the industry - outputs are homogeneous   

 This means that the quantity demanded is responsive to change in price
A

Perfect Competition (Perfectly elastic)

93
Q

large number of buyers and sellers each would be to smaller a unit to affect the price of the product.

A

Demand Curve

94
Q

the point where market demands will be equal to market supply
- In short run, demand affect equilibrium, in the long run, demand and supply affect equilibrium

A

Equilibrium of Perfect Competition

95
Q
  • single firm that is producing product -

there are no close substitutes

  • 1 seller & large buyers -

no entry of new firms

A

Pure Monopoly (Inelastic)

96
Q

its demand curve is industry curve the not perfectly elastic demand but negatively sloped
- if the seller in the pure monopoly wants to sell more, he must lower its price

A

DEMAND CURVE OF PURE MONOPOLY

97
Q

Is the output at which total profits are maximized

A

Short Run Equilibrium

98
Q

Total Revenue Curve is domed-shape
- Total Cost is arising
- TR - TC = PROFIT - TC = TR break even point is achieved

A

SHORT RUN PROFIT MAXIMIZING OUTPUT OF PURE MONOPOLY

99
Q

in this, monopolist may incurlosses
- Losses will be minimized if the monopolist produces where short run MC = short run MR

A

SHORT RUN LOSS MINIMIZATION

100
Q

entry of new firms is difficult and is often blocked
- monopolist adjust their long run output by
Means of plant size adjustments- plant is smaller than the most efficient size, most efficient size will be appropriate.

A

Long Run Equilibrium

101
Q

charging different prices for the same commodity, the first market is inelastic demand, the second will be elastic demand

A

Price Discrimination

102
Q

monopolies can’t just be left alone by the government as other industries in more competitive models are left alone.

A

Regulation of monopoly

103
Q

large number of small firms - homogeneous products
- with close substitutes

A

MONOPOLISTIC COMPETITION (ELASTIC DEMAND CURVE)

104
Q

developed the theory of monopolistic competition

A

Edward Chamberlin

105
Q

Monopolistic output is less - Monopolistic has higher prices than perfect competition

A

Monopolistic vs Perfect Competition

106
Q

Monopolistic output greater - Monopolistic has lower prices and lower profits

A

Monopolistic vs Pure Monopoly

107
Q

small number of firms - with interdependence in each other

A

Oligopoly

108
Q

produced identical products, change in price greater affects competitors

A

Pure Oligopoly

109
Q

produced different products, change in price less affects competitors

A

Differentiated Oligopoly

110
Q

formal org in the industry, have agreements

A

Perfect Collusion

111
Q

informal arrangements, doesn’t have clear agreements

A

Imperfect Collusion

112
Q

traditional feature of oligopoly - explain the rigidity of prices in oligopolistic market
- elastic in price increase - competitors match a price decrease
- downward sloping like demand curve

A

Kinked Demand Curve

BMGT 21 FINALS (1 decks)

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