Short topics Flashcards
0
Q
Where is revenue maximisation?
A
MR=0
1
Q
Where is profit maximisation?
A
MR=MC
2
Q
Where is productive efficiency?
A
AC=MC
Lowest point on AC curve cut by MC curve
Firm producing at lowest cost
3
Q
Where is allocative efficiency?
A
P=MC
Optimum allocation of resources, ie piece consumers are willing to pay represents the price they pay for the good
4
Q
What is x-inefficiency?
A
Firms become complacent due to lack of competition
5
Q
What is normal profit?
A
Minimum amount required to keep fop in that line of production
=> the opportunity cost of keeping fop in their current use
1) TR=TC
2) AR=AC
6
Q
What might be barriers to entry?
A
Economies of scale Legal barriers- protection of a new idea Limit pricing Capital costs Sunk costs
7
Q
Name 3 barriers to exit
A
Cost of making workers redundant
Supplier contracts
Selling premises and stock at a loss
