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djk > Untitled Deck > Flashcards

Untitled Deck Flashcards

1
Q

Measures how much quantity demanded changes in response to a price change.

A

What is the price elasticity of demand?

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2
Q

When the price elasticity of demand is greater than 1.

A

What is elastic demand?

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3
Q

When the price elasticity of demand is less than 1.

A

What is inelastic demand?

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4
Q

When the price elasticity of demand equals 1.

A

What is unitary elasticity?

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5
Q

Substitute availability, necessity vs luxury, time, and proportion of income spent.

A

What factors affect price elasticity of demand?

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6
Q

A method to assess elasticity based on how total revenue changes with price.

A

What is the total revenue test?

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7
Q

Measures responsiveness of quantity supplied to a change in price.

A

What is price elasticity of supply?

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8
Q

Measures how the demand for one good responds to a price change in another good.

A

What is cross elasticity of demand?

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9
Q

Measures how demand changes as consumer income changes.

A

What is income elasticity of demand?

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10
Q

Quantity demanded does not change regardless of price changes.

A

What is perfectly inelastic demand?

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11
Q

Monetary payments made by a firm to outsiders to acquire resources.

A

What are explicit costs?

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12
Q

Opportunity costs of using resources owned by the firm.

A

What are implicit costs?

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13
Q

Total revenue minus explicit and implicit costs.

A

What is economic profit?

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14
Q

Total revenue minus explicit costs.

A

What is accounting profit?

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15
Q

Costs that do not change with the level of output.

A

What are fixed costs?

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16
Q

Costs that change with the level of output.

A

What are variable costs?

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17
Q

The additional cost of producing one more unit.

A

What is marginal cost?

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18
Q

Total cost divided by quantity of output.

A

What is average total cost?

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19
Q

Adding more of a variable input to fixed inputs eventually leads to smaller increases in output.

A

What is the law of diminishing marginal returns?

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20
Q

A relationship showing the maximum output that can be produced with different combinations of inputs.

A

What is a production function?

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21
Q

Large number of firms, identical products, free entry/exit.

A

What are the characteristics of pure competition?

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22
Q

Perfectly elastic.

A

What is the demand curve for a firm in pure competition?

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23
Q

The additional revenue from selling one more unit.

A

What is marginal revenue?

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24
Q

Produce where marginal cost equals marginal revenue (MC = MR).

A

What is the profit maximization rule?

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25
Q

The portion of the marginal cost curve above AVC.

A

What is the short-run supply curve?

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26
Q

When price equals minimum average variable cost (P = AVC).

A

What is the shutdown point?

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27
Q

When total revenue exceeds total cost.

A

What is economic profit in the short run?

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28
Q

It continues to operate if P > AVC but exits if P < AVC.

A

What happens if a firm incurs losses in the short run?

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29
Q

Producing the mix of goods most desired by society (P = MC).

A

What is allocative efficiency in pure competition?

30
Q

Producing at the lowest cost (P = minimum ATC).

A

What is productive efficiency in pure competition?

31
Q

It becomes zero due to entry and exit of firms.

A

What happens to economic profit in the long run?

32
Q

An industry where input costs remain unchanged as firms enter or exit.

A

What is a constant-cost industry?

33
Q

An industry where input costs rise as firms enter.

A

What is an increasing-cost industry?

34
Q

An industry where input costs fall as firms enter.

A

What is a decreasing-cost industry?

35
Q

Shows the relationship between price and quantity supplied when firms can enter or exit.

A

What is the long-run supply curve?

36
Q

Efficiency achieved through innovation and technology over time.

A

What is dynamic efficiency?

37
Q

It ensures both productive and allocative efficiency.

A

How does long-run equilibrium promote efficiency?

38
Q

Changing scale of operations to match market demand.

A

What is economic scale adjustment?

39
Q

Due to sustained losses where costs exceed revenue.

A

Why do firms exit a market in the long run?

40
Q

The price at which total revenue equals total cost.

A

What is break-even pricing?

41
Q

Single seller, no close substitutes, high barriers to entry.

A

What are the characteristics of a monopoly?

42
Q

A market where a single firm can produce at a lower cost than multiple firms.

A

What is a natural monopoly?

43
Q

It is less than price due to the downward-sloping demand curve.

A

What is marginal revenue in a monopoly?

44
Q

Charging different prices to different consumers for the same product.

A

What is price discrimination?

45
Q

Price equals marginal cost (P = MC).

A

What is the socially optimal price?

46
Q

Loss of economic efficiency due to monopolist pricing above marginal cost.

A

What is deadweight loss in a monopoly?

47
Q

Obstacles like patents, economies of scale, and legal restrictions.

A

What are barriers to entry?

48
Q

Price equals average total cost (P = ATC).

A

What is the fair-return price?

49
Q

Government intervention to control prices or break up monopolies.

A

What is monopoly regulation?

50
Q

Where marginal revenue equals marginal cost (MR = MC).

A

What is a monopoly’s profit-maximizing output level?

51
Q

Many sellers, differentiated products, some price control.

A

What are the characteristics of monopolistic competition?

52
Q

Making products unique through quality, features, or branding.

A

What is product differentiation?

53
Q

Operating below efficient scale in the long run.

A

What is excess capacity?

54
Q

Strategies like advertising and product improvement to attract customers.

A

What is nonprice competition?

55
Q

To increase demand and brand loyalty.

A

What is the role of advertising?

56
Q

Economic profit is zero due to entry of new firms.

A

What is the long-run equilibrium in monopolistic competition?

57
Q

In monopolistic competition, firms sell differentiated products.

A

How does monopolistic competition differ from perfect competition?

58
Q

Producing where price is greater than marginal cost (P > MC).

A

What is allocative inefficiency?

59
Q

Operating at higher than the minimum average total cost.

A

What is productive inefficiency?

60
Q

To differentiate products and capture market share.

A

Why do firms advertise in monopolistic competition?

61
Q

Few large firms, interdependence, barriers to entry.

A

What are the characteristics of an oligopoly?

62
Q

The study of strategic interactions among firms.

A

What is game theory?

63
Q

A strategy that is the best regardless of others’ actions.

A

What is a dominant strategy?

64
Q

A stable outcome where no player can benefit by changing strategy alone.

A

What is Nash equilibrium?

65
Q

A formal agreement to fix prices or output levels.

A

What is a cartel?

66
Q

One firm sets the price, and others follow to avoid price wars.

A

What is the price leadership model?

67
Q

An agreement among firms to restrict competition.

A

What is collusion?

68
Q

A demand curve with a segment reflecting price rigidity.

A

What is a kinked demand curve?

69
Q

Firms’ decisions depend on expected reactions of competitors.

A

What is interdependence in oligopoly?

70
Q

Incentives to cheat undermine collusion agreements.

A

Why do cartels often fail?

djk (5 decks)

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