Test 2 Flashcards
1
Q
ATC =
A
TC/Q
2
Q
MC =
A
Change in TC/Change in Q, or derivative of TC(in terms of Q)
3
Q
TC =
A
FC + VC
4
Q
AFC =
A
FC/Q
5
Q
AVC =
A
VC/Q
6
Q
Shut down if
A
TR < VC or
P < AVC
7
Q
Exit if
A
TR < TC of
P < ATC
8
Q
Profit formula
A
TR - TC =
(P-ATC) x Q
9
Q
Output effect
A
Quantity rises, total revenue rises
10
Q
Price effect
A
Price decreases, total revenue decreases
11
Q
Assumptions of perfect competition
A
Many firms
Same products
No barriers to entry
12
Q
Assumptions of monopoly
A
One firm
High barriers to entry
13
Q
Assumptions of monopolistic competition
A
Many firms
Similar but differentiated products
No barriers to entry
14
Q
Assumptions of oligopoly
A
Few firms
Similar but differentiated products
Few firms contain most market shares
High barriers to entry
15
Q
Does the long run-equilibrium lead to positive profit in perfect comp?
A
No
