EC201 Vocab ch7-10 - Custom Scholars
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EC201 Vocab ch7-10

question
average cost
answer
the total cost divided by the total product
question
average product
answer
the average amount produced by each unit of a variable factor of production
question
factors of production
answer
Land, labor, and capital; the three groups of resources that are used to make all goods and services
question
Law of Diminishing Marginal Returns
answer
The marginal product of an input will eventually decrease as more of that input is used. The law of diminishing marginal returns assumes that all other inputs remain constant.
question
long run
answer
the time period in which all inputs can be changed
question
marginal cost
answer
The change in total costs that results from increasing total product by one unit (ΔTC/ΔQ).
question
marginal product
answer
The increase in output from using one more unit of an input while all other inputs are constant (ΔTP/ΔL).
question
production function
answer
A function showing the maximum output for each specific combination of inputs, given technology.
question
short run
answer
the period of time during which at least one of a firm's inputs cannot be changed
question
technological change
answer
A shift in the production function, usually in the direction of a greater quantity of output at each level of input. Technological change may be the result of creation of new products, redesign of old products, or the creation of new methods of manufacturing.
question
total cost
answer
fixed costs plus variable costs
question
total fixed cost
answer
The costs (prices multiplied by the amounts of inputs) of the inputs that are fixed. This is also the amount of cost when total product is zero. Total fixed costs are costs that do not vary as output changes
question
total product
answer
the total amount of output produced
question
total variable cost
answer
the cost of the firm's variable factor of production - the cost of labor
question
average variable cost
answer
Total variable costs divided by total output. Same as average total cost or average cost in the long-run, when all costs are variable.
question
constant returns to scale
answer
Long-run average total cost remains constant as the quantity of output increases.
question
diseconomies of scale
answer
the situation in which a firm's long-run average costs rise as the firm increases output
question
econimies of scale
answer
Long-run average total cost decreases as the quantity of output increases.
question
marginal analysis
answer
analysis that involves comparing marginal benefits and marginal costs
question
marginal product of labor
answer
the change in output from hiring one additional unit of labor
question
Marginal product of capital
answer
The change in total output that results from the firm hiring one more unit of capital.
question
total costs
answer
All costs of producing a specific amount of output.
question
total product
answer
total output produced by the firm
question
total revenue
answer
the total amount of money a firm receives by selling goods or services
question
variable costs
answer
costs that vary with the quantity of output produced
question
accounting profit
answer
total revenue minus total explicit cost
question
average revenue
answer
total revenue divided by the quantity sold
question
economic profits
answer
total revenues divided by the quantity sold
question
entry barrier
answer
Any impediment that makes entry into a market difficult or impossible for new firms.
question
Firm Supply
answer
A firm's quantity supplied at each price level.
question
long-run market supply
answer
The quantity supplied at each price, after firms are given time to vary all inputs and to enter and exit the industry
question
marginal revenue
answer
the additional income from selling one more unit of a good; sometimes equal to price
question
market supply
answer
the sum of all that is supplied each period by all producers of a single product
question
perfectly competitive market
answer
A market with many buyers and sellers, with each seller offering the same good or service. Consumers and producers are aware of quality of inputs and goods and prices. Firms can easily enter and exit the industry
question
price taker
answer
A firm "takes" the price that is given it by the market supply and demand conditions. The firm can do nothing to change that price.
question
total revenue
answer
The number of goods sold multiplied by the price at which they are sold.
question
barriers to entry
answer
factors that make it difficult and costly for an organization to enter a particular task environment or industry
question
Monopoly
answer
A market in which there are many buyers but only one seller.
question
natural monopoly
answer
A firm that can produce at a lower average cost per unit of output than a number of smaller firms producing a similar amount of total output
question
price discrimination
answer
A producer charges different prices for different units of output of the same product for reasons other than differences in costs.
question
Cartel
answer
A group of producers agreeing to act in concert with one another
question
monoploistic competition
answer
An industry with many competitors, all producing slightly different products.
question
Oligopoly
answer
An industry with few producers, high entry barriers, and each one has market power. They compete on either price or quantity and may charge the same or different prices
question
payoff matrix
answer
A payoff matrix is usually a two-by-two table with two actors or players. Each player will have a set of actions that will result in different payoffs. Each player's payoff is dependent on both players' course of action.
question
antitrust law
answer
Legislation that restricts deliberate formation of monopolies and prevents firms from engaging in anticompetitive practices.
question
average cost pricing
answer
A price, set by a regulator of a natural monopoly, equal to average cost at the corresponding quantity demanded.
question
concentration ratio
answer
A four-firm concentration ratio is the percentage of industry sales sold by the four largest firms in the industry. Other similar measures, that indicate the degree of market power and competitiveness, are often used.
question
Marginal cost pricing
answer
A price, set by a regulator of a natural monopoly, equal to marginal cost at the corresponding quantity demanded.
question
predatory pricing
answer
A firm that lowers prices with the purpose of driving competitors out of a market, increasing its own market power, and eventually reducing output and raising prices is engaging in predatory pricing
1 of 49
question
average cost
answer
the total cost divided by the total product
question
average product
answer
the average amount produced by each unit of a variable factor of production
question
factors of production
answer
Land, labor, and capital; the three groups of resources that are used to make all goods and services
question
Law of Diminishing Marginal Returns
answer
The marginal product of an input will eventually decrease as more of that input is used. The law of diminishing marginal returns assumes that all other inputs remain constant.
question
long run
answer
the time period in which all inputs can be changed
question
marginal cost
answer
The change in total costs that results from increasing total product by one unit (ΔTC/ΔQ).
question
marginal product
answer
The increase in output from using one more unit of an input while all other inputs are constant (ΔTP/ΔL).
question
production function
answer
A function showing the maximum output for each specific combination of inputs, given technology.
question
short run
answer
the period of time during which at least one of a firm's inputs cannot be changed
question
technological change
answer
A shift in the production function, usually in the direction of a greater quantity of output at each level of input. Technological change may be the result of creation of new products, redesign of old products, or the creation of new methods of manufacturing.
question
total cost
answer
fixed costs plus variable costs
question
total fixed cost
answer
The costs (prices multiplied by the amounts of inputs) of the inputs that are fixed. This is also the amount of cost when total product is zero. Total fixed costs are costs that do not vary as output changes
question
total product
answer
the total amount of output produced
question
total variable cost
answer
the cost of the firm's variable factor of production - the cost of labor
question
average variable cost
answer
Total variable costs divided by total output. Same as average total cost or average cost in the long-run, when all costs are variable.
question
constant returns to scale
answer
Long-run average total cost remains constant as the quantity of output increases.
question
diseconomies of scale
answer
the situation in which a firm's long-run average costs rise as the firm increases output
question
econimies of scale
answer
Long-run average total cost decreases as the quantity of output increases.
question
marginal analysis
answer
analysis that involves comparing marginal benefits and marginal costs
question
marginal product of labor
answer
the change in output from hiring one additional unit of labor
question
Marginal product of capital
answer
The change in total output that results from the firm hiring one more unit of capital.
question
total costs
answer
All costs of producing a specific amount of output.
question
total product
answer
total output produced by the firm
question
total revenue
answer
the total amount of money a firm receives by selling goods or services
question
variable costs
answer
costs that vary with the quantity of output produced
question
accounting profit
answer
total revenue minus total explicit cost
question
average revenue
answer
total revenue divided by the quantity sold
question
economic profits
answer
total revenues divided by the quantity sold
question
entry barrier
answer
Any impediment that makes entry into a market difficult or impossible for new firms.
question
Firm Supply
answer
A firm's quantity supplied at each price level.
question
long-run market supply
answer
The quantity supplied at each price, after firms are given time to vary all inputs and to enter and exit the industry
question
marginal revenue
answer
the additional income from selling one more unit of a good; sometimes equal to price
question
market supply
answer
the sum of all that is supplied each period by all producers of a single product
question
perfectly competitive market
answer
A market with many buyers and sellers, with each seller offering the same good or service. Consumers and producers are aware of quality of inputs and goods and prices. Firms can easily enter and exit the industry
question
price taker
answer
A firm "takes" the price that is given it by the market supply and demand conditions. The firm can do nothing to change that price.
question
total revenue
answer
The number of goods sold multiplied by the price at which they are sold.
question
barriers to entry
answer
factors that make it difficult and costly for an organization to enter a particular task environment or industry
question
Monopoly
answer
A market in which there are many buyers but only one seller.
question
natural monopoly
answer
A firm that can produce at a lower average cost per unit of output than a number of smaller firms producing a similar amount of total output
question
price discrimination
answer
A producer charges different prices for different units of output of the same product for reasons other than differences in costs.
question
Cartel
answer
A group of producers agreeing to act in concert with one another
question
monoploistic competition
answer
An industry with many competitors, all producing slightly different products.
question
Oligopoly
answer
An industry with few producers, high entry barriers, and each one has market power. They compete on either price or quantity and may charge the same or different prices
question
payoff matrix
answer
A payoff matrix is usually a two-by-two table with two actors or players. Each player will have a set of actions that will result in different payoffs. Each player's payoff is dependent on both players' course of action.
question
antitrust law
answer
Legislation that restricts deliberate formation of monopolies and prevents firms from engaging in anticompetitive practices.
question
average cost pricing
answer
A price, set by a regulator of a natural monopoly, equal to average cost at the corresponding quantity demanded.
question
concentration ratio
answer
A four-firm concentration ratio is the percentage of industry sales sold by the four largest firms in the industry. Other similar measures, that indicate the degree of market power and competitiveness, are often used.
question
Marginal cost pricing
answer
A price, set by a regulator of a natural monopoly, equal to marginal cost at the corresponding quantity demanded.
question
predatory pricing
answer
A firm that lowers prices with the purpose of driving competitors out of a market, increasing its own market power, and eventually reducing output and raising prices is engaging in predatory pricing
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