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# micro test 2

question
MU>0
TU is rising
question
MU=0
TU is at its peak
question
MU
change in TU/ change Q
question
TU
sum of the MUS
question
Diminishing MU and law of demand
p decrease when buying more and MU decreases as you get more
question
MUa/Pa > MUb/Pb
question
MUa/Pa = MUb/Pb
maximizing utility
question
rational choice theory
people behave like human calculators and compare the many MU per dollar calculations for all major purchases
question
Bounded Rationality
we make so many decisions each day that we rely on rules of thumb, habits and emotions in making many economic decisions
question
bounded rationality includes following rules of thumb and habits:
you get what you pay for, follow the leader, and focal point equilibria
question
status-quo bias
people like the current situation so if you have a new car and then your income decreases then it would be hard for you to adjust to the new income
question
conspicuous consumption
showing off like trump with his plane
question
ultimatum game
people like whats fair , if someone offered you 50\$ when they get \$50 , you would accept but if they only offered you 10\$ and kept the rest you would reject.
question
profit
TR-TC
question
explicit cost
obvious costs that are needed for the business. like blender
question
implicit cost
the OC of using resources owned by the entrepreneur that could be used for another purpose . ex: if you own the store then forgone rent, entrepreneur forgone salary.
question
in the short run,at least one input is
fixed
question
in the long run, all inputs are
variable
question
law of diminishing returns
law of diminishing marginal productivity; as more variable inputs are added to a fixed input, at some point the productivity of the variable input will decrease
question
law of diminishing marginal utility
as you are engaged in an activity each additional increment gives less pleasure than the previous increment
question
accounting profit
revenue- explicit cost
question
economic profit
R-C
question
MC
change in TC/ change in Q
question
AP
average product= TP/ units of labor
question
MP
marginal product= change in TP
question
on long run cost curves
all costs are variable
question
four market structures
perfect( or pure) competition, pure monopoly, monopolistic competition, oligopoly
question
pure competition- market traits
1. very large # of firms 9 no one firm has market power)
2. standardized product or homogenous product ( milk, grains)
3. sellers are prices taker( market determines the price)
4. no barriers to entry ( no patents, no major licensing)
question
in pure competition a firm maximizes profit
TR exceeds TC by a maximum amount
question
in pure competition a firm maximizes profit ( or minimizes loss)
producing at a quantity where MR=MC
question
in pure competition a firm will shut down
if the price is below AVC
question
positive economic profit
new firms will enter the market, supply increase, price falls
question
economic loss
firms will exit the market, supply decreases, price rises
question
long run equilibrium
firms are making 0 ( or normal) economic profits
question
equilibrium
MR=MC=P=Minimum ATC and the market achieves elective efficiency, productive efficiency, and the combined areas of consumer & producer surplus are maximized
question
new innovations
change the cost structure in pure competition through the process of creative destruction
question
MU is the
change in TU obtained by consuming one more unit of a good
question
TU of a product is calculated by
summing the MU for each successive unit of the product thats consumed
question
which is a dimension of assumption of the MU theory of consumer behavior?
goods&services carry a price tag
question
a consumer w/ a fixed income will maximize utility when each good is purchased in mouton such that the
MU per dollar spent is the same for all goods
question
downward sloping demand curve can be derived for a normal product by decreasing its price in the consumer- behavior model and noting:
increase in utility maximizing quantity of that product demanded
question
consumers demand curve for a product is down sloping because
MU diminishes as more of a product is consumed
question
product has utility if it
satisfies consumer wants
question
price ratio of the two products is the
slope of the budget line
question
costs to an economist
may or may not involve monetary outlays
question
implicit costs are
"payments" for self-employed resources
question
cash expenditures a firm makes to pay for resources are called
explicit costs
question
in the short run, output
can vary as the result of using a fixed amount of plant and equipment more or less intesively
question
main difference between short run and the long run is that
in short run, one or more inputs is fixed
question
which of the following is most likely to be a fixed cost?
question
if you know that when a firm produces 10 units of output, TC are \$1030 and AFC are \$10, then TFC are?
\$100
question
economies & diseconomies of scale explain:
why the firms long run ATC cure is U-shaped
question
when diseconomies of scale occur?
long run ATC curve rises
question
when a firm doubles its inputs and finds that its output has more than doubled, this is known as ?
economies of scale
question
for a purely competitive seller, price equals
AR, MR, TR/Q
question
for a pruely competitive firm , TR ?
1. is price times quantity sold
2.increases by constant absolute amt. as output expands
3.graphs as a striaght upsloping line from the origin
question
in the standard model of pure competition, a profit maximizing entrepreneur will shut down in the short run if?
TR is less than TVC
question
in a typical graph for a purely competitive firm, the intersection of the TC & TR curves would be?
break even pt
question
wage rates increase in a purely competitive industry.this change will result in an?
increase in the marginal cost curve for a firm in the industry
question
in the short run a purely competitive firm that seeks to maximize profit will produce?
where TR exceeds TC by the maximum amount
question
a firm reaches a break even pt ( normal profit position) where?
TR and TC are equal
question
in the short run the individual competitive firms supply curve is that segment of the?
MC curve lying above the AVC curve
question
a purely competitive firms short run supply curve is?
up sloping & equal to the portion of the MC curve that lies above the AVC curve
question
resource costs increase in a purely competitive industry. this change will result in a
decrease in the short run supply curve for a firm in the industry
question
when a purely competitive industry is in LR equilibrium, which stmt is true?
price and AVC are equal
question
productive efficiency refers to ?
cost minimization , where p= minimum ATC
question
an economy is producing at the least-cost rate of production when?
price and the minimum ATC are equal
question
if a purely competitive firm is producing at the MR=MC output level and earrings an economic profit, then?
new firms will enter this market
question
LR equilibrium of a purely competitive industry ensures?
consumer and producer surplus is maximized
question
in the short run purely competitive firms earn ______ in equilibrium while in the LR firms earn _________ in equilibrium
profits or losses, normal profit
question
creative destruction
1. stimulates growth
2.contributes to the production of new goods
3.forces firms to be innovative
1 of 71
question
MU>0
TU is rising
question
MU=0
TU is at its peak
question
MU
change in TU/ change Q
question
TU
sum of the MUS
question
Diminishing MU and law of demand
p decrease when buying more and MU decreases as you get more
question
MUa/Pa > MUb/Pb
question
MUa/Pa = MUb/Pb
maximizing utility
question
rational choice theory
people behave like human calculators and compare the many MU per dollar calculations for all major purchases
question
Bounded Rationality
we make so many decisions each day that we rely on rules of thumb, habits and emotions in making many economic decisions
question
bounded rationality includes following rules of thumb and habits:
you get what you pay for, follow the leader, and focal point equilibria
question
status-quo bias
people like the current situation so if you have a new car and then your income decreases then it would be hard for you to adjust to the new income
question
conspicuous consumption
showing off like trump with his plane
question
ultimatum game
people like whats fair , if someone offered you 50\$ when they get \$50 , you would accept but if they only offered you 10\$ and kept the rest you would reject.
question
profit
TR-TC
question
explicit cost
obvious costs that are needed for the business. like blender
question
implicit cost
the OC of using resources owned by the entrepreneur that could be used for another purpose . ex: if you own the store then forgone rent, entrepreneur forgone salary.
question
in the short run,at least one input is
fixed
question
in the long run, all inputs are
variable
question
law of diminishing returns
law of diminishing marginal productivity; as more variable inputs are added to a fixed input, at some point the productivity of the variable input will decrease
question
law of diminishing marginal utility
as you are engaged in an activity each additional increment gives less pleasure than the previous increment
question
accounting profit
revenue- explicit cost
question
economic profit
R-C
question
MC
change in TC/ change in Q
question
AP
average product= TP/ units of labor
question
MP
marginal product= change in TP
question
on long run cost curves
all costs are variable
question
four market structures
perfect( or pure) competition, pure monopoly, monopolistic competition, oligopoly
question
pure competition- market traits
1. very large # of firms 9 no one firm has market power)
2. standardized product or homogenous product ( milk, grains)
3. sellers are prices taker( market determines the price)
4. no barriers to entry ( no patents, no major licensing)
question
in pure competition a firm maximizes profit
TR exceeds TC by a maximum amount
question
in pure competition a firm maximizes profit ( or minimizes loss)
producing at a quantity where MR=MC
question
in pure competition a firm will shut down
if the price is below AVC
question
positive economic profit
new firms will enter the market, supply increase, price falls
question
economic loss
firms will exit the market, supply decreases, price rises
question
long run equilibrium
firms are making 0 ( or normal) economic profits
question
equilibrium
MR=MC=P=Minimum ATC and the market achieves elective efficiency, productive efficiency, and the combined areas of consumer & producer surplus are maximized
question
new innovations
change the cost structure in pure competition through the process of creative destruction
question
MU is the
change in TU obtained by consuming one more unit of a good
question
TU of a product is calculated by
summing the MU for each successive unit of the product thats consumed
question
which is a dimension of assumption of the MU theory of consumer behavior?
goods&services carry a price tag
question
a consumer w/ a fixed income will maximize utility when each good is purchased in mouton such that the
MU per dollar spent is the same for all goods
question
downward sloping demand curve can be derived for a normal product by decreasing its price in the consumer- behavior model and noting:
increase in utility maximizing quantity of that product demanded
question
consumers demand curve for a product is down sloping because
MU diminishes as more of a product is consumed
question
product has utility if it
satisfies consumer wants
question
price ratio of the two products is the
slope of the budget line
question
costs to an economist
may or may not involve monetary outlays
question
implicit costs are
"payments" for self-employed resources
question
cash expenditures a firm makes to pay for resources are called
explicit costs
question
in the short run, output
can vary as the result of using a fixed amount of plant and equipment more or less intesively
question
main difference between short run and the long run is that
in short run, one or more inputs is fixed
question
which of the following is most likely to be a fixed cost?
question
if you know that when a firm produces 10 units of output, TC are \$1030 and AFC are \$10, then TFC are?
\$100
question
economies & diseconomies of scale explain:
why the firms long run ATC cure is U-shaped
question
when diseconomies of scale occur?
long run ATC curve rises
question
when a firm doubles its inputs and finds that its output has more than doubled, this is known as ?
economies of scale
question
for a purely competitive seller, price equals
AR, MR, TR/Q
question
for a pruely competitive firm , TR ?
1. is price times quantity sold
2.increases by constant absolute amt. as output expands
3.graphs as a striaght upsloping line from the origin
question
in the standard model of pure competition, a profit maximizing entrepreneur will shut down in the short run if?
TR is less than TVC
question
in a typical graph for a purely competitive firm, the intersection of the TC & TR curves would be?
break even pt
question
wage rates increase in a purely competitive industry.this change will result in an?
increase in the marginal cost curve for a firm in the industry
question
in the short run a purely competitive firm that seeks to maximize profit will produce?
where TR exceeds TC by the maximum amount
question
a firm reaches a break even pt ( normal profit position) where?
TR and TC are equal
question
in the short run the individual competitive firms supply curve is that segment of the?
MC curve lying above the AVC curve
question
a purely competitive firms short run supply curve is?
up sloping & equal to the portion of the MC curve that lies above the AVC curve
question
resource costs increase in a purely competitive industry. this change will result in a
decrease in the short run supply curve for a firm in the industry
question
when a purely competitive industry is in LR equilibrium, which stmt is true?
price and AVC are equal
question
productive efficiency refers to ?
cost minimization , where p= minimum ATC
question
an economy is producing at the least-cost rate of production when?
price and the minimum ATC are equal
question
if a purely competitive firm is producing at the MR=MC output level and earrings an economic profit, then?
new firms will enter this market
question
LR equilibrium of a purely competitive industry ensures?
consumer and producer surplus is maximized
question
in the short run purely competitive firms earn ______ in equilibrium while in the LR firms earn _________ in equilibrium
profits or losses, normal profit
question
creative destruction
1. stimulates growth
2.contributes to the production of new goods
3.forces firms to be innovative

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