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MICRO final
study guide
| Question | Answer |
|---|---|
| What are the factors of production | land, labor, capital, entrepreneurship |
| ex of land | natural resources |
| ex of labor | effort of workers |
| ex of capital | machinery |
| ex of entrepreneurship | risk taking/innovation |
| what do points along the ppc curve indicate? | society is producing w/ all factors efficiently |
| Law of demand | as price increases the quantity of demand will decrease |
| where is the equilibrium price located? | where s and d intersect |
| how is perfectly inelastic supply shown on a curve? | vertical supply line |
| how is perfectly elastic supply shown on a curve? | horizontal supply line |
| calculation for consumer surplus | willingness to pay-price |
| economic profit | total revenue earned by a firm minus both explicit and implicit costs |
| accounting profit | total revenue minus the firm's explicit costs |
| calculation for total product of labor | sum of all production over a period of time |
| all factors are considered what in the long run? | variable |
| characteristics of perfect competition | many firms, standardized, free entry and exit, price TAKER |
| characteristics of monopolistic competition | hundreds of firms, differentiated, no barriers |
| characteristics of oligopoly | few firms, strong barriers to entry |
| characteristics of monopoly | 1 firm, 1 producer with no close substitutes, huge barriers to entry |
| what does P>ATC indicate? | positive economic profit |
| what does MR=MC indicate? | where profits are maximized |
| what does MPL(P)=wage indicate? | where profit-max firms choose the quantity of labor |
| what does MC=ATC indicate? | "break even" |
| market failure model (Mod 76) when does a competitive market achieve equilibrium? | MR=MC |
| what is the key theme to economics? | unlimited wants and limited resources |
| economics is the study of what? | scarcity |
| why does the PPC bow? | increasing opportunity costs |
| PPC point inside curve, outside curve, on curve? | inefficient(not using enough employment) unattainable, efficient |
| max price set below equilibrium price is known as what? | shortage |
| calculation of elasticity of demand | %changeQd/%changeP |
| what makes demand elastic? | > or=1 |
| what makes demand inelastic? | between 0 and 1 |
| How does the effect of imposing an excise tax by the government on a good effect the supplier? | supplier will produce less quantity of a good |
| calculation of marginal utility | change in total utility/change in x |
| when is total utility maximized? | =0 |
| If marginal benefit of producing an additional unit is greater than the marginal cost of producing another unit, what will a firm do? | produce |
| ATC curve (Mod 55) calculate total cost of producing a given amount of goods | tc/q |
| Natural monopoly | when an individual firm comes to dominate an industry by producing goods and services at the lowest possible production cost |
| price discrimination | the use of different prices charged to various customers for the same product or service |
| duopoly | When 2 firms are in control |
| given payoff matrix, determine the optimal combination and the nash equilibrium combination | |
| why would oligopolists collude? | to reduce output and keep prices high |
| monopolistic comp-identify what model shows competitor's loss in short run, shows profit in short run, and shows long run equilibrium | long run-breaks even profit in sr- atc below price loss in sr-atc above price |
| compensating differentials | higher pay for jobs that have more risks etc |
| discrimination | people of similar economic characteristics experience unequal economic outcomes as a result of noneconomic factors such as race or sex |
| Environmental standards | rules that protect the environment by specifying limits or actions for producers and consumers |
| Tradable emissions permits | the right to pollute a certain amount |
| negative externality | the imposition of a cost on a party as an indirect effect of the actions of another party |
| What is the Coase theorem | parties involved in a property dispute can come up with a mutually advantageous solution through negotiation or bargaining conditions |
| Marginal benefit curve of pollution (mod75) | demand curve for cleaner air |
| excludable goods | private goods; suppliers can prevent people who don't pay from buying |
| nonexcludable goods | public; "free" |
| what is the most important cause of the increase in income inequality? | high skilled and low skilled labor markets |
| What is the most important factor of production on total income? | labor |
Created by:
auweb921
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