Micro Notes 8+9+10

Question 1

Profit sharing
Bonuses
Pay check
Stock options
Tax credits
Business grants
fines/fees
Dock in pay
promotion/demotion

Answer 1

incentives used in factor markets

Question 2

• Land: the natural resources used to produce goods and offer services
• Labor: effort humans contribute
• Capital: machinery, tools, and buildings
• Entrepreneurship: combining the other factors of production in new ways

Answer 2

factors of production

Question 3

supply is determined by demand

Answer 3

long run supply line

Question 4

level of supply is fixed

Answer 4

market period

Question 5

the amount of input required to create each additional unit of output

Answer 5

marginal productivity (mp)

Question 6

why the supply line slopes up; inverse relationship with marginal productivity

Answer 6

marginal cost (mc)

Question 7

the cost of staying in business; more than money

Answer 7

normal return

Question 8

Shifts marginal costs up
Direct relationship with marginal cost
Causes supply to shift up or down
Price of inputs into production
Level of technology can lower cost
Environment of production (e.g. farming)

Answer 8

cost structure

Question 9

supply shifts to the right as new firms enter the market

Answer 9

Entry and exit

Question 10

Measure that distributes costs evenly among units
Margin moves faster than the average
Margin pulls the average in its direction
Marginal cost cuts average at the minimum average cost

Answer 10

average cost (ac)

Question 11

𝛑=total revenue(TR)-total cost (TC)
𝛑=(P-AC)xQ
Wanted but not necessary to stay in business
Signals market is favorable for suppliers

Answer 11

Profit (𝛑)

Question 12

𝛑 may lead to more competition, therefore a decrease in price
Innovation for a competitive edge

Answer 12

Profit and competition