man econ final Flashcards
average total costs
TC/Q or TC/ output
average variable costs
TVC/ Q
average fixed costs
TFC/Q
marginal costs
change in TC/ change in Q
long run average costs
outside envelope of all possible ATC using every possible combination of all inputs
increasing returns to scale
when the percent change increases in all inputs is smaller than the percent change increase in output
constant returns to scale
when the percent change increases in all inputs is equal to the percent change increase in output
decreasing returns to scale
when the percent change increases in all inputs is larger than the percent change increase in output
marginal revenue
the additional revenue from selling 1 more unit
perfect competition
many buyers and sellers, perfect information, homogeneous product, free entry and exit
shut down price
when the firm is indifferent between producing + shutting down,
losses from producing = TFC
constant cost competitive industry
a competitive industry where the
elasticity of supply in LR= infinity
increasing cost competitive industry
a competitive industry where the
elasticity of supply in LR> 0
decreasing cost competitive industry
a competitive industry where the
elasticity of supply in LR< 0
monopoly
a single firm producing a good where there are no substitutes
barrier to entry
legal and technical reasons which prevent new firms from entering a market
natural monopoly
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
economies of scope
TC of producing 2 outputs by one firm < TC of producing 2 outputs in seperate firm
cost complementaries
when MC of a good decreases as output of another good increases
monopolistic competition
many firms, many buyers, differentiated product, free entry and exit
sweazy oligopoly
each firm believes rivals will match P decreases but not price increases
stackelburg oligopoly
leader uses information about how others have to react in order to choose its profit max P and Q
cournot oligopoly
oligopoly where each firm believes rivals will not change Q in response to putput changes by the firm
bertrand oligopoly
small # of firms with homogenous products, zero transaction costs + perfect information
cartel
collusive agreement among firms to decrease Q and increase P in order to generate monopoly profits
first degree price discrimination
when everyone is charged their willingness to pay
second degree price discrimination
when discrete bundles are sold at different per unit prices
third degree price discrimination
when segmented markets are charged different prices
