Econ 1 Final Chapter

question

Government Tax Revenue

answer

T x Q

question

Deadweight Loss

answer

the fall in total surplus that results from a market distortion, such as tax

question

more elastic demand/supply =

answer

= more dwl

question

Externality

answer

the uncompensated impact of one person's actions on the well-being of a bystander

question

If negative externality

answer

market quantity larger than socially desirable

question

If positive externality

answer

market quantity smaller than socially desirable

question

negative externalities

answer

tax goods with

question

positive externalities

answer

subsidize goods with

question

Pigouvian tax example

answer

Tax on tobacco

question

Firms goal is to

answer

maximize profits

question

require money

answer

explicit cost

question

do NOT require money

answer

implicit cost

question

Explicit vs Implicit

answer

paying wages vs opportunity cost

question

Accounting Profit Formula

answer

revenue minus explicit costs

question

Economic Profit Formula

answer

revenue minus total costs

question

implicit

answer

economic factors in ... costs whereas accounting does not

question

Production Function

answer

the relationship between the quantity of inputs used to make a good and the quantity of output of that good

question

marginal product

answer

the increase in output arising from an additional unit of that input

question

Diminishing marginal product

answer

The marginal product of an input declines as the quantity of the input increases

question

Fixed Costs

answer

costs that do not vary with the quantity of output produced

question

Variable Costs

answer

costs that do vary with the quantity of output produced

question

Total Costs

answer

equals fixed plus variable cost

question

steeper and steeper

answer

the total cost curve gets ... and ... as output rises

question

fixed and variable

answer

short run inputs are BLANK and long run inputs are BLANK

question

Marginal Cost

answer

change in total cost (TC) / change in Quantity

question

Average Total Cost

answer

total cost/quantity

question

Average Fixed Cost

answer

fixed cost/ quantity

question

Average Variable Cost

answer

variable cost/quantity

question

U-Shaped

answer

ATC is usually BLANK

question

falling

answer

When MC < ATC,ATC is BLANK

question

rising

answer

When MC > ATC,ATC is BLANK

question

minimum

answer

the MC curve crosses the ATC curve at the ATC curve's

question

cost per unit

answer

In the long run, ATC at any Q is BLANK using the most efficient mix of inputs for that Q

question

efficient scale

answer

The quantity that minimizes ATC

question

Economies of scale

answer

ATC falls as Q increases

question

Constant returns to scale

answer

ATC stays the same as Q increases

question

Diseconomies of scale

answer

ATC rises as Q increases

question

factors of a competitive firm

answer

many buyers and many sellers, same product, can enter and exit freely

question

average revenue

answer

total revenue/quantity sold

question

marginal revenue

answer

the change in total revenue from an additional unit sold

question

For competitive firms

answer

price = average revenue = marginal revenue

question

price takers

answer

buyer and sellers are BLANK in competitive markets

question

competitive markets

answer

MR=P is only true in BLANK

question

increase

answer

If MR > MC, then BLANK Q to raise profit

question

reduce

answer

If MR < MC, then BLANK Q to raise profit

question

Shutdown

answer

A short-run decision not to produce anything because of market conditions

question

Exit

answer

A long-run decision to leave the market

question

Shut down

answer

P < AVC

question

Enter

answer

P > AVC

1 of 49

question

Government Tax Revenue

answer

T x Q

question

Deadweight Loss

answer

the fall in total surplus that results from a market distortion, such as tax

question

more elastic demand/supply =

answer

= more dwl

question

Externality

answer

the uncompensated impact of one person's actions on the well-being of a bystander

question

If negative externality

answer

market quantity larger than socially desirable

question

If positive externality

answer

market quantity smaller than socially desirable

question

negative externalities

answer

tax goods with

question

positive externalities

answer

subsidize goods with

question

Pigouvian tax example

answer

Tax on tobacco

question

Firms goal is to

answer

maximize profits

question

require money

answer

explicit cost

question

do NOT require money

answer

implicit cost

question

Explicit vs Implicit

answer

paying wages vs opportunity cost

question

Accounting Profit Formula

answer

revenue minus explicit costs

question

Economic Profit Formula

answer

revenue minus total costs

question

implicit

answer

economic factors in ... costs whereas accounting does not

question

Production Function

answer

the relationship between the quantity of inputs used to make a good and the quantity of output of that good

question

marginal product

answer

the increase in output arising from an additional unit of that input

question

Diminishing marginal product

answer

The marginal product of an input declines as the quantity of the input increases

question

Fixed Costs

answer

costs that do not vary with the quantity of output produced

question

Variable Costs

answer

costs that do vary with the quantity of output produced

question

Total Costs

answer

equals fixed plus variable cost

question

steeper and steeper

answer

the total cost curve gets ... and ... as output rises

question

fixed and variable

answer

short run inputs are BLANK and long run inputs are BLANK

question

Marginal Cost

answer

change in total cost (TC) / change in Quantity

question

Average Total Cost

answer

total cost/quantity

question

Average Fixed Cost

answer

fixed cost/ quantity

question

Average Variable Cost

answer

variable cost/quantity

question

U-Shaped

answer

ATC is usually BLANK

question

falling

answer

When MC < ATC,ATC is BLANK

question

rising

answer

When MC > ATC,ATC is BLANK

question

minimum

answer

the MC curve crosses the ATC curve at the ATC curve's

question

cost per unit

answer

In the long run, ATC at any Q is BLANK using the most efficient mix of inputs for that Q

question

efficient scale

answer

The quantity that minimizes ATC

question

Economies of scale

answer

ATC falls as Q increases

question

Constant returns to scale

answer

ATC stays the same as Q increases

question

Diseconomies of scale

answer

ATC rises as Q increases

question

factors of a competitive firm

answer

many buyers and many sellers, same product, can enter and exit freely

question

average revenue

answer

total revenue/quantity sold

question

marginal revenue

answer

the change in total revenue from an additional unit sold

question

For competitive firms

answer

price = average revenue = marginal revenue

question

price takers

answer

buyer and sellers are BLANK in competitive markets

question

competitive markets

answer

MR=P is only true in BLANK

question

increase

answer

If MR > MC, then BLANK Q to raise profit

question

reduce

answer

If MR < MC, then BLANK Q to raise profit

question

Shutdown

answer

A short-run decision not to produce anything because of market conditions

question

Exit

answer

A long-run decision to leave the market

question

Shut down

answer

P < AVC

question

Enter

answer

P > AVC

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Econ 1 Final Chapter

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