Term
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Definition
| Total cost- total fixed cost |
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Term
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Definition
| Total fixed cost/ quantity |
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Term
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Definition
| Cost that does not change when output changes |
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Term
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Definition
| per-unit cost. changes when output changes |
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Term
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Definition
| Time in which you may change everything; time with all variable costs |
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Term
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Definition
| Time during which you cannot change everything (both fixed and variable costs) |
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Term
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Definition
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Term
| What must you do in the short run? |
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Definition
| You must cover variable costs- fixed costs will exist whether you stay in business or not |
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Term
| Shutting down in the long run |
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Definition
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Term
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Definition
| change in total cost when Q is changed by one unit |
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Term
| Where do firms wish to produce? |
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Definition
| Where marginal revenue= marginal cost; where profits are maximized |
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Term
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Definition
| "Price takers"- firms who take whatever price they can get. The demand curve is infinitely elastic |
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Term
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Definition
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Term
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Definition
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Term
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Definition
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Term
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Definition
| Firm producing a good for which there is no substitute |
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Term
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Definition
| many firms, completely small. If they shut down, total output will not be affected |
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Term
| Marginal Revenue and Price |
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Definition
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Term
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Definition
| Oligopoly. For oligopolists, it is very hard to derive a demand curve because so much depends on the competitors |
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Term
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Definition
| Differentiation through services. Demand curve is very elastic |
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Term
| How much can a firm will perfect competition sell? |
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Definition
| As much as it wishes- the market supply will not be affected |
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Term
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Definition
| (perfect competition) CANNOT lower costs- we assume that firms are producing as efficiently as possible |
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Term
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Definition
| What is the optimum-sized firm? Determined by asking businesses that have been around for a while |
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Term
| Slope of the total revenue curve |
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Definition
| Is marginal revenue(price) |
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Term
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Definition
| At a point where total revenue is greater than total cost- where profits are the biggest. Gap is where slope of two lines are equal- MR=MC |
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Term
| Where does the Marginal Cost curve go? |
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Definition
| Through the minimum point on the Average Cost curve |
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Term
| When marginal cost> average cost |
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Definition
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Term
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Definition
| What employees/ executives need to pay themselves (worked into total cost) |
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Term
| When an excess profit seems normal |
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Definition
| A decrease in excess profit will feel like a loss |
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Term
| Best indicator of a very competitive industry |
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Definition
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Term
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Definition
| We assume that the industries we study do not have fluctuating costs- as the industry gets bigger, cost curves do not move. |
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Term
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Definition
| Are increasing cost industry- as industry gets larger, cost goes up |
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Term
| How to deal with negative externalities |
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Definition
| Accept "toleration" payment; pay to change the externality |
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Term
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Definition
| As industry gets bigger, cost goes down (tech) |
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Term
| Why tech doesn't get hoarded |
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Definition
| One payment cannot hope to equal what many copies of the product would command on the open market |
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Term
| When marginal cost> average cost |
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Definition
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Term
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Definition
| means that cost of each individual unit will add a lot to cost |
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Term
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Definition
| One fixed amount of tax, doesn't change according to Q produced |
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Term
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Definition
| Variable. Assigned to each product produced |
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Term
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Definition
| Marginal and Average Costs both increase by whatever the tax is |
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Term
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Definition
| Price of the tax is shared by consumers and firm if price goes up, but not commensurate with tax; firm foots bill if price is not adjusted |
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Term
| With perfect competition, taxes |
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Definition
| Cause the industry output to go down (because firms are making losses and leave) |
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Term
| The more elastic a demand curve |
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Definition
| The less price will go up when a tax is added |
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Term
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Definition
| AC goes up, every firm produces at same place because MC and MR did not change |
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