AP Microeconomics (section 10) - Custom Scholars
Home » Flash Cards » AP Microeconomics (section 10)

# AP Microeconomics (section 10)

question
Profit
answer
Profit= Total Revenue- Total Cost
(Remember Total Revenue= Price (P)*Quantity(Q)
question
Explicit cost
answer
involves actually laying out money
question
Implicit cost
answer
does not require an outlay of money; it is measured by the value, in dollar terms, of benefits that are forgone. (monetary version of opportunity cost value)
question
Depreciation
answer
reduction of value over a period or passage of time
question
accounting profit
answer
=TR- (explicit cost+depreciation)
question
Total opportunity cost
answer
=Total explicit cost+ Total implicit cost
question
economic profit
answer
=TR- opportunity cost (less than accounting profit)
question
implicit cost of capital
answer
the opportunity cost of the capital used by the business-
the income the owner could have realized from that capital if it had been used in its next best alternative way.
question
Normal profit
answer
an economic profit equal to zero
an economic profit just high enough to keep a fir engaged in its current activity
question
PRINCIPLE OF MARGINAL ANALYSIS
answer
activity of a firm or business, etc. should continue until MARGINAL BENEFIT EQUALS MARGINAL COST
question
Marginal revenue
answer
the change in total revenue generated by an additional unit of output
question
optimal output rule
answer
produce at the quantity where marginal revenue of the last unit produced is equal to its marginal cost, there, profit will maximize
question
marginal cost curve
answer
the cost of producing one more unit depends on the quantity that has already been produced (swoosh shaped)
question
marginal revenue curve
answer
marginal revenue varies as output varies (straight HORIZONTAL LINE AT MARKET PRICE)
question
marginal cost
answer
the change in total (opportunity?) cost generated by an addition unit of output
=change in total cost/change in quantity of output
straight UPWARDS SLOPING
question
production function
answer
relationship between the quantity of inputs a firm uses and quantity of output it produces
question
fixed input
answer
input whose quantity is fixed for a period of time and cannot be varied
question
variable input
answer
input whose quantity the firm can vary at any time
question
long run
answer
the time period in which all inputs can be varied
question
short run
answer
the time period in which at least one input is fixed
question
total product curve
answer
output depends on variable input (upwards sloping, slightly curved)
question
marginal product
answer
additional quantity of output produced by using one more unit of input
question
diminishing returns to an input
answer
an increase in quantity of that input, holding the levels of all other inputs fixed, leads to a decline in the marginal product of that input
question
Marginal product of labor curve
answer
downwards sloping (change in quantity of output divided by change in quantity of labor)
question
fixed cost
answer
does not depend on quantity of output produced. The cost of the fixed input.
question
variable cost
answer
depends on the quantity of output produced. The cost of the variable input.
question
total cost
answer
sum of the fixed and the variable cost of producing that quantity of output
question
total cost curve
answer
total cost depends on the quantity of output (slopes upwards curved)
question
average cost
answer
=total cost/quantity
U-shaped average total cost curves (norm for firms in many industries)
question
average fixed cost
answer
=fixed cost/quantity of output
downwards sloping bowed inwards, levels out to x-axis
question
average variable cost
answer
=variable cost/quantity of output
upwards sloping
question
minimum-cost input
answer
the quantity of output at which average total cost is lowest- it corresponds to the bottom of the U-shaped average total cost curve
question
long-run average total cost curve
answer
the relationship between output and average total cost when fixed cost has chosen to minimize average total cost for each level of output
less than short term cost
sum of short run average total costs over a period of time
FIXED COST CAN BE CHOSEN IN THE LONG RUN
question
economies of scale
answer
long-run average total cost declines as output increases.
increasing returns to scale- output increases more than in proportion to an increase in all inputs.
question
sunk cost
answer
cost that has already been incurred and is nonrecoverable. (can be ignored for future decisions and actions)
question
diseconomies of scale
answer
long-run average total cost increases as output increases.
decreasing returns to scale- output increases less than in proportion to an increase in all inputs.
question
price-taking firm
answer
firm whose ACTIONS HAVE NO EFFECT on the market price of the good or service it sells.
question
price-taking consumer
answer
a consumer whose ACTIONS HAVE NO EFFECT on the market price of the good or service he or she buys
question
perfectly competitive market
answer
a market in which all participants are price-takers
question
perfectly competitive industry
answer
industry in which firms are price takers
question
market share
answer
fraction of the total industry output accounted for by that firm's output
question
standardized products/commondities
answer
consumers regard the products of different firms as the same good
different firms selling the same good (perfectly competitive)
question
patent
answer
(n.) exclusive rights over an invention; copyright; (v.) to arrange or obtain such rights
question
oligopoly
answer
an industry with only a small number of firms (interdependence)
oligopolist
question
imperfect competition
answer
no one firm has a monopoly, but producers nonetheless realize that they can affect market prices
question
monopolistic competition
answer
market structure in which there are many competing firms in an industry, each firm sells a differentiated product, and there is free entry into and exit from the industry in the long run
1 of 46
question
Profit
answer
Profit= Total Revenue- Total Cost
(Remember Total Revenue= Price (P)*Quantity(Q)
question
Explicit cost
answer
involves actually laying out money
question
Implicit cost
answer
does not require an outlay of money; it is measured by the value, in dollar terms, of benefits that are forgone. (monetary version of opportunity cost value)
question
Depreciation
answer
reduction of value over a period or passage of time
question
accounting profit
answer
=TR- (explicit cost+depreciation)
question
Total opportunity cost
answer
=Total explicit cost+ Total implicit cost
question
economic profit
answer
=TR- opportunity cost (less than accounting profit)
question
implicit cost of capital
answer
the opportunity cost of the capital used by the business-
the income the owner could have realized from that capital if it had been used in its next best alternative way.
question
Normal profit
answer
an economic profit equal to zero
an economic profit just high enough to keep a fir engaged in its current activity
question
PRINCIPLE OF MARGINAL ANALYSIS
answer
activity of a firm or business, etc. should continue until MARGINAL BENEFIT EQUALS MARGINAL COST
question
Marginal revenue
answer
the change in total revenue generated by an additional unit of output
question
optimal output rule
answer
produce at the quantity where marginal revenue of the last unit produced is equal to its marginal cost, there, profit will maximize
question
marginal cost curve
answer
the cost of producing one more unit depends on the quantity that has already been produced (swoosh shaped)
question
marginal revenue curve
answer
marginal revenue varies as output varies (straight HORIZONTAL LINE AT MARKET PRICE)
question
marginal cost
answer
the change in total (opportunity?) cost generated by an addition unit of output
=change in total cost/change in quantity of output
straight UPWARDS SLOPING
question
production function
answer
relationship between the quantity of inputs a firm uses and quantity of output it produces
question
fixed input
answer
input whose quantity is fixed for a period of time and cannot be varied
question
variable input
answer
input whose quantity the firm can vary at any time
question
long run
answer
the time period in which all inputs can be varied
question
short run
answer
the time period in which at least one input is fixed
question
total product curve
answer
output depends on variable input (upwards sloping, slightly curved)
question
marginal product
answer
additional quantity of output produced by using one more unit of input
question
diminishing returns to an input
answer
an increase in quantity of that input, holding the levels of all other inputs fixed, leads to a decline in the marginal product of that input
question
Marginal product of labor curve
answer
downwards sloping (change in quantity of output divided by change in quantity of labor)
question
fixed cost
answer
does not depend on quantity of output produced. The cost of the fixed input.
question
variable cost
answer
depends on the quantity of output produced. The cost of the variable input.
question
total cost
answer
sum of the fixed and the variable cost of producing that quantity of output
question
total cost curve
answer
total cost depends on the quantity of output (slopes upwards curved)
question
average cost
answer
=total cost/quantity
U-shaped average total cost curves (norm for firms in many industries)
question
average fixed cost
answer
=fixed cost/quantity of output
downwards sloping bowed inwards, levels out to x-axis
question
average variable cost
answer
=variable cost/quantity of output
upwards sloping
question
minimum-cost input
answer
the quantity of output at which average total cost is lowest- it corresponds to the bottom of the U-shaped average total cost curve
question
long-run average total cost curve
answer
the relationship between output and average total cost when fixed cost has chosen to minimize average total cost for each level of output
less than short term cost
sum of short run average total costs over a period of time
FIXED COST CAN BE CHOSEN IN THE LONG RUN
question
economies of scale
answer
long-run average total cost declines as output increases.
increasing returns to scale- output increases more than in proportion to an increase in all inputs.
question
sunk cost
answer
cost that has already been incurred and is nonrecoverable. (can be ignored for future decisions and actions)
question
diseconomies of scale
answer
long-run average total cost increases as output increases.
decreasing returns to scale- output increases less than in proportion to an increase in all inputs.
question
price-taking firm
answer
firm whose ACTIONS HAVE NO EFFECT on the market price of the good or service it sells.
question
price-taking consumer
answer
a consumer whose ACTIONS HAVE NO EFFECT on the market price of the good or service he or she buys
question
perfectly competitive market
answer
a market in which all participants are price-takers
question
perfectly competitive industry
answer
industry in which firms are price takers
question
market share
answer
fraction of the total industry output accounted for by that firm's output
question
standardized products/commondities
answer
consumers regard the products of different firms as the same good
different firms selling the same good (perfectly competitive)
question
patent
answer
(n.) exclusive rights over an invention; copyright; (v.) to arrange or obtain such rights
question
oligopoly
answer
an industry with only a small number of firms (interdependence)
oligopolist
question
imperfect competition
answer
no one firm has a monopoly, but producers nonetheless realize that they can affect market prices
question
monopolistic competition
answer
market structure in which there are many competing firms in an industry, each firm sells a differentiated product, and there is free entry into and exit from the industry in the long run

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
• 24/7 support
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
• Expert Proofreading
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

## Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

### Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

### Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Order your essay today and save 20% with the discount code BEGOOD