Comprehensive Microeconomics Study Set

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Price elasticity of demand

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A measure of how much the quantity demanded of a good responds to a change in the price of that good.

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Price-elasticity equation

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(change in Q_x demanded/[sum of Q's/2]) / (change in P_x/[sum of P's/2])

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Change in quantity demanded/supplied = [blank].

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A shift ALONG the curve

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Change in demand/supply = [blank].

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A shift OF the curve

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Accounting Profit = [blank].

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Total revenue - Explicit costs

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Economic Profit = [blank].

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Total revenue - (Explicit costs + Implicit costs)

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For economies of scale, per unit cost [blank] as scale increases.

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goes down

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For constant returns to scale, per unit cost [blank] as scale increases.

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stays the same

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For diseconomies of scale, per unit cost [blank] as scale increases.

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goes up

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Marginal Product Equation

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MP = Change in TP / Change in Input

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Average Product Equation

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AP = TP / Units of Input

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The Marginal Product curve cuts through the Average Product curve at the [blank].

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Maximum Average Product point

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If a long-run ATC is downward sloping over a large area, the market structure is most likely a [blank].

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monopoly

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With perfect competition, there are [blank] firms with [blank] products and [blank] price setting power. L.R. profit is [blank], entry and exit is [blank], and there [blank] allocative and/or product efficiency.

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many, the same, no, zero, free, is

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With monopolistic competition, there are [blank] firms with [blank] products and [blank] price setting power. L.R. profit is [blank], entry and exit is [blank], and there [blank] allocative and/or product efficiency.

answer

many, different (non-price competition), some (locally), zero, relatively easy, is not

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With an oligopoly, there are [blank] firms with [blank] products and [blank] price setting power. L.R. profit is [blank], entry and exit is [blank], and there [blank] allocative and/or product efficiency.

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few, the same or different (non-price competition), limited, very likely, very difficult, is not

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With a monopoly, there is [blank] firm with [blank] products and [blank] price setting power. L.R. profit is [blank], entry and exit is [blank], and there [blank] allocative and/or product efficiency.

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one, unique, major, very very likely, blocked, is not

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Perfect Competition Marginal Revenue Conditions

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Marginal Revenue = Demand, Average Revenue, and Price

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For monopolistic competition, [blank] = [blank] in the long run.

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P, ATC

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In the long run for a constant cost industry, the cost curves [blank] as the industry expands.

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stay constant

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In the long run for an increasing cost industry, the cost curves [blank] as the industry expands.

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up and to the left

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Natural Monopoly

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A monopoly that arises because a single firm can supply a good/service to an entire market at a smaller cost than could two or more firms.

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Reservation Wage

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The lowest wage a worker is willing to accept for a given job.

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Marginal Revenue Product (MRP) Equations

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Price * Marginal Product = MRP = change in Total Revenue / change in Labor

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Marginal Resource Cost (MRC) Equation

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MRC = change in Total Cost / change in Labor

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For a wage taker, MRC [blank].

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equals market wage rate

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For a monopsony (wage makers), MRC [blank].

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is greater than wage paid

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Shifters of Labor Demand

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Changes in product demand, changes in worker productivity, and changes in prices of other resources.

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An increase in product demand will cause [blank] in labor demand.

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an increase

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An increase in worker productivity will cause [blank] in labor demand.

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an increase

1 of 30

question

Price elasticity of demand

answer

A measure of how much the quantity demanded of a good responds to a change in the price of that good.

question

Price-elasticity equation

answer

(change in Q_x demanded/[sum of Q's/2]) / (change in P_x/[sum of P's/2])

question

Change in quantity demanded/supplied = [blank].

answer

A shift ALONG the curve

question

Change in demand/supply = [blank].

answer

A shift OF the curve

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Accounting Profit = [blank].

answer

Total revenue - Explicit costs

question

Economic Profit = [blank].

answer

Total revenue - (Explicit costs + Implicit costs)

question

For economies of scale, per unit cost [blank] as scale increases.

answer

goes down

question

For constant returns to scale, per unit cost [blank] as scale increases.

answer

stays the same

question

For diseconomies of scale, per unit cost [blank] as scale increases.

answer

goes up

question

Marginal Product Equation

answer

MP = Change in TP / Change in Input

question

Average Product Equation

answer

AP = TP / Units of Input

question

The Marginal Product curve cuts through the Average Product curve at the [blank].

answer

Maximum Average Product point

question

If a long-run ATC is downward sloping over a large area, the market structure is most likely a [blank].

answer

monopoly

question

answer

many, the same, no, zero, free, is

question

answer

many, different (non-price competition), some (locally), zero, relatively easy, is not

question

answer

few, the same or different (non-price competition), limited, very likely, very difficult, is not

question

answer

one, unique, major, very very likely, blocked, is not

question

Perfect Competition Marginal Revenue Conditions

answer

Marginal Revenue = Demand, Average Revenue, and Price

question

For monopolistic competition, [blank] = [blank] in the long run.

answer

P, ATC

question

In the long run for a constant cost industry, the cost curves [blank] as the industry expands.

answer

stay constant

question

In the long run for an increasing cost industry, the cost curves [blank] as the industry expands.

answer

up and to the left

question

Natural Monopoly

answer

A monopoly that arises because a single firm can supply a good/service to an entire market at a smaller cost than could two or more firms.

question

Reservation Wage

answer

The lowest wage a worker is willing to accept for a given job.

question

Marginal Revenue Product (MRP) Equations

answer

Price * Marginal Product = MRP = change in Total Revenue / change in Labor

question

Marginal Resource Cost (MRC) Equation

answer

MRC = change in Total Cost / change in Labor

question

For a wage taker, MRC [blank].

answer

equals market wage rate

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For a monopsony (wage makers), MRC [blank].

answer

is greater than wage paid

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Shifters of Labor Demand

answer

Changes in product demand, changes in worker productivity, and changes in prices of other resources.

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An increase in product demand will cause [blank] in labor demand.

answer

an increase

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An increase in worker productivity will cause [blank] in labor demand.

answer

an increase

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Comprehensive Microeconomics Study Set

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