man econ final

Question 1

average total costs

Answer 1

TC/Q or TC/ output

Question 2

average variable costs

Answer 2

TVC/ Q

Question 3

average fixed costs

Answer 3

TFC/Q

Question 4

marginal costs

Answer 4

change in TC/ change in Q

Question 5

long run average costs

Answer 5

outside envelope of all possible ATC using every possible combination of all inputs

Question 6

increasing returns to scale

Answer 6

when the percent change increases in all inputs is smaller than the percent change increase in output

Question 7

constant returns to scale

Answer 7

when the percent change increases in all inputs is equal to the percent change increase in output

Question 8

decreasing returns to scale

Answer 8

when the percent change increases in all inputs is larger than the percent change increase in output

Question 9

marginal revenue

Answer 9

the additional revenue from selling 1 more unit

Question 10

perfect competition

Answer 10

many buyers and sellers, perfect information, homogeneous product, free entry and exit

Question 11

shut down price

Answer 11

when the firm is indifferent between producing + shutting down,

losses from producing = TFC

Question 12

constant cost competitive industry

Answer 12

a competitive industry where the
elasticity of supply in LR= infinity

Question 13

increasing cost competitive industry

Answer 13

a competitive industry where the
elasticity of supply in LR> 0

Question 14

decreasing cost competitive industry

Answer 14

a competitive industry where the
elasticity of supply in LR< 0

Question 15

monopoly

Answer 15

a single firm producing a good where there are no substitutes

Question 16

barrier to entry

Answer 16

legal and technical reasons which prevent new firms from entering a market

Question 17

natural monopoly

Answer 17

when econs of scale exist in the market, one firm will be able to produce making a profit, 2 or more firms will all incur losses

Question 18

economies of scope

Answer 18

TC of producing 2 outputs by one firm < TC of producing 2 outputs in seperate firm

Question 19

cost complementaries

Answer 19

when MC of a good decreases as output of another good increases

Question 20

monopolistic competition

Answer 20

many firms, many buyers, differentiated product, free entry and exit

Question 21

sweazy oligopoly

Answer 21

each firm believes rivals will match P decreases but not price increases

Question 22

stackelburg oligopoly

Answer 22

leader uses information about how others have to react in order to choose its profit max P and Q

Question 23

cournot oligopoly

Answer 23

oligopoly where each firm believes rivals will not change Q in response to putput changes by the firm

Question 24

bertrand oligopoly

Answer 24

small # of firms with homogenous products, zero transaction costs + perfect information

Question 25

cartel

Answer 25

collusive agreement among firms to decrease Q and increase P in order to generate monopoly profits

Question 26

first degree price discrimination

Answer 26

when everyone is charged their willingness to pay

Question 27

second degree price discrimination

Answer 27

when discrete bundles are sold at different per unit prices

Question 28

third degree price discrimination

Answer 28

when segmented markets are charged different prices