Micro Conditions Flashcards
1
Q
Profit
A
TR - TC
2
Q
Abnormal Profits
A
AR > AC
TR > TC
3
Q
Loss Profits
A
AR < AC
TR < TC
4
Q
Normal Profits:
- Sales Maximisation
- Break-even point
- Entry limit Price
A
AR = AC
TR = TC
5
Q
Allocative Efficiency
Economies of Scale are exploited
A
D = S
MSB = MSC
P = MC
6
Q
Dynamic Efficiency
A
LR Abnormal Profits
7
Q
Min. Efficiency Scale
EoS start being exploited
A
Lowest Q when AC stops decreasing
8
Q
Shutdown
A
AR < AVC
9
Q
Utility Max
A
MU = 0
10
Q
Social Costs
A
Private + External Costs
11
Q
Social Benefits
A
Private + External Benefits
12
Q
Inelastic
A
0 < PED < 1
13
Q
Elastic
A
PED > 1
14
Q
Inferior Good
A
PED < 0
(downward curve)
15
Q
Unit Elastic
A
PED = 1
