Econ phrases 10-13

question

short run

answer

period of time when at least 1 factor of production (K) is fixed

question

long run

answer

all inputs are variable

question

total product

answer

output of production

question

marginal product

answer

additional output from hiring 1 more L

question

Marginal Product formula

answer

change in Q or TP over change in L

question

average product

answer

amount of output per worker

question

average product

answer

Q/L

question

total fixed cost

answer

costs of the first fixed inputs that do not change with Q

question

total variable cost

answer

cost of the first variable inputs that change with output

question

marginal cost formula

answer

Δtc/Δq or Δvc/Δq

question

AFC

answer

fixed cost per unit of output

question

AFC formula

answer

TFC/Q

question

AVC

answer

variable cost per unit of output

question

AVC formula

answer

VC/Q

question

ATC

answer

average cost of production

question

ATC formula

answer

AFC+AVC or TC/Q

question

inc returns to labor

answer

productivity inc due to specialization

question

diminishing returns to labor

answer

productivity dec due to fixed K

question

Avg grade

answer

like GPA

question

Marg Grade

answer

econ grade

question

shape of marginal and average product curves

answer

inverted U shape

question

MP and AP trick

answer

MP and AP intersect at max AP

question

short-run decision

answer

whether to produce or shut down, if i decide to stay in business how much I should produce

question

marginal revenue SR

answer

d=p=mr

question

long run decision

answer

when there is no tendency to leave or enter the industry, ie all firms that wanted to enter or exit did so

question

external economies

answer

...

question

external diseconomies

answer

...

question

single price monopoly

answer

charges the same price to all customers

question

shape of MR and Demand

answer

MR lies below because MR<P and D=P(Q)

question

monopolist supply lines

answer

monopoly decides about P and Q at the same time, it does not look at P to determine Q

question

natural monopoly

answer

when the industry has HUGE fixed costs or network externalities --> better for society to have M than PC

question

shape of ATC

answer

U-shaped

question

price discrimination

answer

charging different P's to different customers for the same product based on their willingness to pay, but not on differences in costs

question

1st degree PD

answer

everybody pays their MB (auctions)

question

2nd degree PD

answer

the more you buy, the less you pay (bulk sale)

question

3rd degree PD

answer

discrimination based on elasticities of D

question

conditions for PD

answer

market power, ability to identify and separate diff types of customers, ability to prevent resale

question

oligopoly

answer

market structure with 2 types of models (traditional or game theory)

question

game theory

answer

tool for studying strategic behavior that takes into account expected behavior of others

question

nash equilibrium

answer

every player takes the best possible action for themselves given the actions of other players

question

dominant strategy

answer

strategy that would be played regardless of the strategies of other players

question

cartel

answer

group of firms.countries that enter collusive agreement restrict output, raise price and receive monopoly profit

question

sequential entry game

answer

1 player makes decision in the 1st stage and another in the next stage

question

contestable market

answer

oligopoly market with low barriers to entry where firms face competition from potential entrants

1 of 44

question

short run

answer

period of time when at least 1 factor of production (K) is fixed

question

long run

answer

all inputs are variable

question

total product

answer

output of production

question

marginal product

answer

additional output from hiring 1 more L

question

Marginal Product formula

answer

change in Q or TP over change in L

question

average product

answer

amount of output per worker

question

average product

answer

Q/L

question

total fixed cost

answer

costs of the first fixed inputs that do not change with Q

question

total variable cost

answer

cost of the first variable inputs that change with output

question

marginal cost formula

answer

Δtc/Δq or Δvc/Δq

question

AFC

answer

fixed cost per unit of output

question

AFC formula

answer

TFC/Q

question

AVC

answer

variable cost per unit of output

question

AVC formula

answer

VC/Q

question

ATC

answer

average cost of production

question

ATC formula

answer

AFC+AVC or TC/Q

question

inc returns to labor

answer

productivity inc due to specialization

question

diminishing returns to labor

answer

productivity dec due to fixed K

question

Avg grade

answer

like GPA

question

Marg Grade

answer

econ grade

question

shape of marginal and average product curves

answer

inverted U shape

question

MP and AP trick

answer

MP and AP intersect at max AP

question

short-run decision

answer

whether to produce or shut down, if i decide to stay in business how much I should produce

question

marginal revenue SR

answer

d=p=mr

question

long run decision

answer

when there is no tendency to leave or enter the industry, ie all firms that wanted to enter or exit did so

question

external economies

answer

...

question

external diseconomies

answer

...

question

single price monopoly

answer

charges the same price to all customers

question

shape of MR and Demand

answer

MR lies below because MR<P and D=P(Q)

question

monopolist supply lines

answer

monopoly decides about P and Q at the same time, it does not look at P to determine Q

question

natural monopoly

answer

when the industry has HUGE fixed costs or network externalities --> better for society to have M than PC

question

shape of ATC

answer

U-shaped

question

price discrimination

answer

charging different P's to different customers for the same product based on their willingness to pay, but not on differences in costs

question

1st degree PD

answer

everybody pays their MB (auctions)

question

2nd degree PD

answer

the more you buy, the less you pay (bulk sale)

question

3rd degree PD

answer

discrimination based on elasticities of D

question

conditions for PD

answer

market power, ability to identify and separate diff types of customers, ability to prevent resale

question

oligopoly

answer

market structure with 2 types of models (traditional or game theory)

question

game theory

answer

tool for studying strategic behavior that takes into account expected behavior of others

question

nash equilibrium

answer

every player takes the best possible action for themselves given the actions of other players

question

dominant strategy

answer

strategy that would be played regardless of the strategies of other players

question

cartel

answer

group of firms.countries that enter collusive agreement restrict output, raise price and receive monopoly profit

question

sequential entry game

answer

1 player makes decision in the 1st stage and another in the next stage

question

contestable market

answer

oligopoly market with low barriers to entry where firms face competition from potential entrants

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Econ phrases 10-13

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