lesson 6-9, part of 10 Flashcards
What does the price of a good represent?
The amount of money the buyer has to spend to buy it from the seller.
What is a cost to a producer?
The amount of money the seller has to spend to produce a good.
What is total cost (TC)
The cost of producing a certain quantity of units of a good.
What is a fixed cost?
Costs that do not vary with the quantity of units produced.
What is a variable cost. (VC)
Costs that vary with the quantity of units produced.
What is marginal cost? (MC)
The cost of producing one more unit of a good.
What is the Law of diminishing Marginal returns?
With fixed input, and an increasing variable input, at some point the marginal product of the variable input must decline.
What is a Marginal product?
The additional output produced when one more unit variable input is added.
What does increasing marginal return mean?
The range of input usage over which marginal product increases.
What is diminishing marginal returns?
The range of input usage over which marginal product decreases.
What does Average Total Cost mean?
The total coast divided by the quantity of units produced.
What are the Average Fixed Costs?
The Total Fixed Cost divided by the quantity of. units produced.
What is the Average Variable Costs mean?
The total variable costs divided by the quantity of units produced.
What is the Short run mean?
The time horizon where some inputs are fixed and some are variables.
What does the Long Run mean?
The time horizon where all inputs are variable.
What does the range of economies of scale mean?
The range where long run average total costs decrease as output increases.
What is the range of diseconomies of scale mean?
The range where long run average total costs increase as output increases.
Why is the range of constant returns of scale?
The range where long run average total costs stay constant as outputs increases.
What does the optimal firm size mean?
The quantity of production that minimizes long run average total costs.
What are the two assumptions for perfect competition?
Zero transaction costs
No coercive barriers to entry
What are transaction costs?
Any costs of going through with an exchange transaction, other than the price of the good itself (shipping)
What is a coercive barrier to entry?
The use or threat of force to prevent others from offering their products for sale to the same customers.
What is Total Revenue?
The amount of money a seller receives in exchange for their products.
What is marginal revenue?
The additional revenue a seller gets from selling one more unit of a good.
What does profit mean?
The difference between a firms total revenue and total cost (PI = TR - TC)
What does accounting profit mean?
The total revenue minus explicit cost.
What is the explicit cost mean?
The amount of money spent on all inputs to a production process.
What is economic profit?
Total revenue minus explicit cost and implicit cost.
What does a implicit cost mean?
The opportunity cost of the money spent on all inputs to a production process.
What are intermediaries?
A person who facilitates an exchange.
What is the Private marginal cost mean?
The cost the supplier bears when it produces one more unit of a good.
What is the social marginal cost?
The cost that everyone in society bears when the supplier produces one more unit of a good.
What is the Non-excludable good?
A good that people can consume even without paying for it.
What is the Free rider problem?
The problem that when a good is non-excludable people have an incentive to consume it but not pay for it.
what is a market failure viewpoint?
Observed inefficiency in a market system a failure of the market to achieve an efficient outcome.
What is the market process?
A free market system is best understood as an outgoing process in which entrepreneurs seek profits by eliminating inefficiency
What does consumer sovereignty mean?
The power of commoners to decide that gets produced.
What is the marginal revenue productivity theory of wages?
The theory that in a competitive market a workers wage is determined by that workers marginal revenue product.
In the shift of the labor demand curve, what is capital accumulation?
Increasing the amount of tools, machines, education, and other goods that make workers more productive.
What is a union?
A group of workers, who voluntarily join together to bargain with their employer as a team.
What is a strike?
When employees stop working until their employer grants certain demands.
In factors that affect capital accumulations, what is deferred consumption mean?
Consuming less in the present in anticipation of consuming more in the future.
What is public choice economics mean?
economic analysis of the political process.
What are the three voting rules?
Plurality(win by most votes)
Majority rule with runoff election, if no majority then their is a second election.
Borda Rule- (Preference lists)
When will a person vote?
When the have a higher incentive to vote by, civic duty, net candidate differential, and probability of decisiveness.
What is Rational ignorance?
When a person is ignorant because the cost of gaining additional information would outweigh the benefit.
what does rent-seeking mean in the government?
Using government coercion to seek benefits at the expense of other people.
