Save
Busy. Please wait.
Log in with Clever
or
show password
Forgot Password?
Don't have an account?  Sign up 
Sign up using Clever
or
Username is available taken
show password


Make sure to remember your password. If you forget it there is no way for StudyStack to send you a reset link. You would need to create a new account. Your email address is only used to allow you to reset your password. See our Privacy Policy and Terms of Service.

Already a StudyStack user? Log In

Reset Password
Enter the associated with your account, and we'll email you a link to reset your password.
focusNode
Didn't know it?
click below
 
Knew it?
click below
Don't Know
Remaining cards (0)
Know
0:00
edit
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.

  Normal Size     Small Size show me how

microeconomics 3

micro vocab ch 13-17

QuestionAnswer
industrial organization the study of how firms’ decisions about prices and quantities depend on the market conditions they face
total revenue the amount a firm receives for the sale of its output
total cost the market value of the inputs a firm uses in production
profit total revenue minus total cost
explicit costs input costs that require an outlay of money by the firm
implicit costs input costs that do not require an outlay of money by the firm
accounting profit total revenue minus total explicit cost
economic profit total revenue minus total cost, including both explicit and implicit costs
production function the relationship between quantity of inputs used to make a good and the quantity of output of that good
marginal product the increase in output that arises from an additional unit of input
diminishing marginal product the property whereby the marginal product of an input declines as the quantity of the input increases
fixed costs costs that do not vary with the quantity of output produced
variable costs costs that vary with the quantity of output produced
average total cost total cost divided by the quantity of output
average fixed cost fixed cost divided by the quantity of output
average variable cost variable cost divided by the quantity of output
marginal cost the increase in total cost that arises from an extra unit of production
Average total cost tells us the cost of a typical unit of output if total cost is divided evenly over all the units produced
Marginal cost tells us the increase in total cost that arises from producing an additional unit of output
efficient scale the quantity of output that minimizes average total cost
its minimum The marginal-cost curve crosses the average-total-cost curve at
diseconomies of scale the property whereby long-run average total cost rises as the quantity of output increases
economies of scale the property whereby long-run average total cost falls as the quantity of output increases
constant returns to scale the property whereby long-run average total cost stays the same as the quantity of output changes
specialization Economies of scale often arise because higher production levels allow
coordination problems Diseconomies of scale can arise because of
competitive market a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker
average revenue total revenue divided by the quantity sold
price takers. Buyers and sellers in competitive markets must accept the price the market determines and, therefore, are said to be
the price of the good average revenue equals
marginal revenue the change in total revenue from an additional unit sold
the price of the good for competitive firms, marginal revenue equals
the market price. a competitive firm is a price taker, so its marginal revenue equals
supply curve. Marginal-cost curve determines the quantity of the good the firm is willing to supply at any price, the marginal-cost curve is the competitive firm’s
Shutdown refers to a short-run decision not to produce anything during a specific period of time because of current market conditions
leave the market Exit refers to a long-run decision to
sunk cost a cost that has already been committed and cannot be recovered
sunk cost. making the short-run decision whether to shut down for a season, the fixed cost of land is said to be a
variable costs of production the firm shuts down if the revenue that it would earn from producing is less than its
above average variable cost. The competitive firm’s short-run supply curve is the portion of its marginal-cost curve that lies
the firm exits the market if the revenue it would get from producing is less than its total costs
above average total cost The competitive firm’s long-run supply curve is the portion of its marginal-cost curve that lies
driven to equality The process of entry and exit ends only when price and average total cost are
more elastic than the short-run supply curve. Because firms can enter and exit more easily in the long run than in the short run, the long-run supply curve is typically
a price maker While a competitive firm is a price taker, a monopoly firm is
Monopoly a firm that is the sole seller of a product without close substitutes
barriers to entry The fundamental cause of monopoly is
Barriers to entry Monopoly resources, Government regulation, production process make up the
natural monopoly a monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms
natural monopoly arises when there are economies of scale over the relevant range of output.
The output effect: More output is sold, so Q is higher, which tends to increase total revenue.
The price effect: The price falls, so P is lower, which tends to decrease total revenue.
marginal-cost curve the monopolist’s profit maximizing quantity of output is determined by the intersection of the marginal-revenue curve and the
marginal cost In competitive markets, price equals __________. In monopolized markets, price exceeds it
socially efficient the _________ quantity is found where the demand curve and the marginal-cost curve intersect
socially efficient The monopolist produces less than _______the quantity of output
price discrimination the business practice of selling the same good at different prices to different customers
arbitrage, the process of buying a good in one market at a low price and selling it in another market at a higher price to profit from the price difference.
Perfect price discrimination a situation in which the monopolist knows exactly each customer’s willingness to pay and can charge each customer a different price
synergies companies that merge to lower costs through more efficient joint production known as
Oligopoly a market structure in which only a few sellers offer similar or identical products
concentration ratio which is the percentage of total output in the market supplied by the four largest firms
monopolistic competition a market structure in which many firms sell products that are similar but not identical
Many sellers, Product differentiation, Free entry and exit of market monopolistic competition describes a market with the what attributes:
efficient scale of the firm. The quantity that minimizes average total cost is called the
excess capacity Firms are said to have _________under monopolistic competition
The product-variety externality: Because consumers get some consumer surplus from the introduction of a new product, entry of a new firm conveys a positive externality on consumers.
The business-stealing externality: Because other firms lose customers and profits from the entry of a new competitor, entry of a new firm imposes a negative externality on existing firms
Oligopoly a market structure in which only a few sellers offer similar or identical products
game theory the study of how people behave in strategic situations
collusion an agreement among firms in a market about quantities to produce or prices to charge
cartel a group of firms acting in unison
Nash equilibrium a situation in which economic actors interacting with one another each choose their best strategy given the strategies that all the other actors have chosen
The output effect: Because price is above marginal cost, selling one more unit at the going price will raise profit
The price effect: Raising production will increase the total amount sold, which will lower the unit price and lower the profit on all the other units sold
prisoners’ dilemma a particular “game” between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial
dominant strategy a strategy that is best for a player in a game regardless of the strategies chosen by the other players
Created by: romoore245
Popular Economics sets

 

 



Voices

Use these flashcards to help memorize information. Look at the large card and try to recall what is on the other side. Then click the card to flip it. If you knew the answer, click the green Know box. Otherwise, click the red Don't know box.

When you've placed seven or more cards in the Don't know box, click "retry" to try those cards again.

If you've accidentally put the card in the wrong box, just click on the card to take it out of the box.

You can also use your keyboard to move the cards as follows:

If you are logged in to your account, this website will remember which cards you know and don't know so that they are in the same box the next time you log in.

When you need a break, try one of the other activities listed below the flashcards like Matching, Snowman, or Hungry Bug. Although it may feel like you're playing a game, your brain is still making more connections with the information to help you out.

To see how well you know the information, try the Quiz or Test activity.

Pass complete!
"Know" box contains:
Time elapsed:
Retries:
restart all cards