Modules 20, 21, 22, 23

question

Production Function

answer

the relationship between the quantity of inputs a firm uses and the quantity of output it produces

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Fixed Input

answer

an input whose quantity is fixed for a period of time and cannot be varied

question

Variable Input

answer

an input whose quantity the firm can vary at any given time

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Long Run

answer

the time period in which all inputs can be varied

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Short Run

answer

the time period in which at least one input is fixed

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Total Product Curve

answer

shoes how the quantity of output depends on the quantity of the variable input, for a given quantity of the fixed input

question

Marginal Product

answer

the additional quantity of output that is produced by using one more unit of that input

question

Diminishing Returns to an Input

answer

when an increase in the quantity of an input, holding the levels of all other inputs fixed, leads to a decline in the marginal product of that input

question

Fixed Cost

answer

a cost that does not depends on the quantity of output produced (the cost of a fixed input)

question

Variable Cost

answer

a cost that depends on the quantity of output produced (the cost of the variable input)

question

Total Cost

answer

cost of producing a given output is the sum of the fixed cost and the variable cost of producing that quantity of output

question

Total Cost Curve

answer

Shows how total cost depends on the quantity of output

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Average Total Cost

answer

total cost divided by quantity of output produced

question

U-Shaped Average Total Cost Curve

answer

a curve that falls at low levels of output, then rises at higher levels

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Average Fixed Cost

answer

the fixed cost per unit of output

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Average Variable Cost

answer

the variable cost per unit of output

question

Minimum-Cost Output

answer

the quantity of output at which average total cost is lowest (bottom of the U-shaped average curve)

question

Long-Run Average Total Cost Curve

answer

shows the relationship between output and average total cost when fixed cost has been chosen to minimize average total cost for each level of output

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Increasing Returns to Scale

answer

when long-run average total cost declines as output increases

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Decreasing Returns to Scale

answer

when long-run average total cost increases as output increases

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Constant Returns to Scale

answer

when long-run average total cost is constant as output increases

question

Price-Taking Producer

answer

a producer whose actions have no effect on the market price of the good or service it sells

question

Price-Taking Consumer

answer

a consumer whose actions have no effect on the market price of the good or service he or she buys

question

Perfectly Competitive Market

answer

a market in which all market participants are price-takers

question

Perfectly Competitive Industry

answer

an industry in which producers are price-takers

question

Market Share

answer

the fraction of the total industry output accounted for by that producer's output

question

Standardized Product (Commodity)

answer

when consumers regard the products of different producers as the same good

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Free Entry and Exit

answer

when new producers can easily enter into an industry and existing producers can easily leave that industry

question

Monopolist

answer

the only producer of a good that has no cost substitutes

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Monopoly

answer

industry that is controlled by a monopolist

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Market Power

answer

the ability of a firm to raise prices

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Barrier to Entry

answer

something that monopolist must have; to prevent other firms from entering the industry

question

Natural Monopoly

answer

when economies of scale provide a large cost advantage to a single firm that produces all of an industry's output

question

Network Externality

answer

when the value of a good or service to an individual is greater when many other people use the same good or service

question

Patent

answer

gives the inventor a temporary monopoly in the use or sale of an invention

question

answer

gives the creator of a literary of artistic work the sole right to profit from that work

question

Oligopoly

answer

an industry with only a small number of firms

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Oligopolist

answer

a producer in an oligopoly

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Imperfect Competition

answer

when no one firm has a monopoly, but producers nonetheless realize that they can affect market prices

question

Collusion

answer

when sellers cooperate to raise their joint profits

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Herfindal-Hirschman Index (HHI)

answer

the square of each firm's share of market sales summed over the industry. Giving a picture of the industry market structure

question

Monopolistic Competition

answer

a market structure in which there are many competing firms in an industry, each firm sells a differentiated product, and there is free entry into and exit from the industry in the long run

1 of 42

question

Production Function

answer

the relationship between the quantity of inputs a firm uses and the quantity of output it produces

question

Fixed Input

answer

an input whose quantity is fixed for a period of time and cannot be varied

question

Variable Input

answer

an input whose quantity the firm can vary at any given time

question

Long Run

answer

the time period in which all inputs can be varied

question

Short Run

answer

the time period in which at least one input is fixed

question

Total Product Curve

answer

shoes how the quantity of output depends on the quantity of the variable input, for a given quantity of the fixed input

question

Marginal Product

answer

the additional quantity of output that is produced by using one more unit of that input

question

Diminishing Returns to an Input

answer

when an increase in the quantity of an input, holding the levels of all other inputs fixed, leads to a decline in the marginal product of that input

question

Fixed Cost

answer

a cost that does not depends on the quantity of output produced (the cost of a fixed input)

question

Variable Cost

answer

a cost that depends on the quantity of output produced (the cost of the variable input)

question

Total Cost

answer

cost of producing a given output is the sum of the fixed cost and the variable cost of producing that quantity of output

question

Total Cost Curve

answer

Shows how total cost depends on the quantity of output

question

Average Total Cost

answer

total cost divided by quantity of output produced

question

U-Shaped Average Total Cost Curve

answer

a curve that falls at low levels of output, then rises at higher levels

question

Average Fixed Cost

answer

the fixed cost per unit of output

question

Average Variable Cost

answer

the variable cost per unit of output

question

Minimum-Cost Output

answer

the quantity of output at which average total cost is lowest (bottom of the U-shaped average curve)

question

Long-Run Average Total Cost Curve

answer

shows the relationship between output and average total cost when fixed cost has been chosen to minimize average total cost for each level of output

question

Increasing Returns to Scale

answer

when long-run average total cost declines as output increases

question

Decreasing Returns to Scale

answer

when long-run average total cost increases as output increases

question

Constant Returns to Scale

answer

when long-run average total cost is constant as output increases

question

Price-Taking Producer

answer

a producer whose actions have no effect on the market price of the good or service it sells

question

Price-Taking Consumer

answer

a consumer whose actions have no effect on the market price of the good or service he or she buys

question

Perfectly Competitive Market

answer

a market in which all market participants are price-takers

question

Perfectly Competitive Industry

answer

an industry in which producers are price-takers

question

Market Share

answer

the fraction of the total industry output accounted for by that producer's output

question

Standardized Product (Commodity)

answer

when consumers regard the products of different producers as the same good

question

Free Entry and Exit

answer

when new producers can easily enter into an industry and existing producers can easily leave that industry

question

Monopolist

answer

the only producer of a good that has no cost substitutes

question

Monopoly

answer

industry that is controlled by a monopolist

question

Market Power

answer

the ability of a firm to raise prices

question

Barrier to Entry

answer

something that monopolist must have; to prevent other firms from entering the industry

question

Natural Monopoly

answer

when economies of scale provide a large cost advantage to a single firm that produces all of an industry's output

question

Network Externality

answer

when the value of a good or service to an individual is greater when many other people use the same good or service

question

Patent

answer

gives the inventor a temporary monopoly in the use or sale of an invention

question

answer

gives the creator of a literary of artistic work the sole right to profit from that work

question

Oligopoly

answer

an industry with only a small number of firms

question

Oligopolist

answer

a producer in an oligopoly

question

Imperfect Competition

answer

when no one firm has a monopoly, but producers nonetheless realize that they can affect market prices

question

Collusion

answer

when sellers cooperate to raise their joint profits

question

Herfindal-Hirschman Index (HHI)

answer

the square of each firm's share of market sales summed over the industry. Giving a picture of the industry market structure

question

Monopolistic Competition

answer

a market structure in which there are many competing firms in an industry, each firm sells a differentiated product, and there is free entry into and exit from the industry in the long run

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Modules 20, 21, 22, 23

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