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21 Cards in this Set
- Front
- Back
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basic economic principles...
_____ make purposeful choices with scare resources. ___ maximize utility..subject to a budget restraint relating expenditure to income ____ maximize profits...subject to a production function relating output to input |
people
consumers firms |
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___= an organization that produces goods or services.
- In the US, about 80% of all firms are _____, with one owner, or ____, with only a few owners who usually manage the firm. A _____ is unlike sole proprietorship or partnership in that the managers are usually somewhat removed from the owners. |
sole proprietorship
partnerships corporation |
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A supply curve for a _____ firm tells us the quantity of a good that that firm will produce at different prices
-to find, the firm looks at the price of a good it is selling and then decides how much to produce |
single
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___= any firm that takes the markt price as given; this firm cannot affect the market price bc the market is competetive
- firm cannot influence the market price, but instead has to decide how much to produce and sell at the given market price of the goods |
price taker
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___= a market in which a single firm cannot affect the market price
-market where no firm has the power to affect the market price of a good -requires that several firms must be competing against each other |
competitive market
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The exact opposit of a competitve market is a market in which there is only one firm, in which case the firm is called a _____. It is a price-maker that can dictate a price, not a price taker
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monopoly
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___= total revenue received from selling the product, minus the total costs of producing the product
= total revenue minus total costs |
profit
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When profits are ____, total revenue is less that total costs and the firm runs a loss.
When profits are ____, total revenue is equal to total costs, and the firm is breaking even. -firms goal is to maximize profits;the firm decides on the quantity of production that will make profits as high as possible |
negative
zero |
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____= the total number of dollars the firm receives from people who buy its product
-it is the price per unit times the quantity the firm sells |
total revenue
TR= Price x quantity |
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___= the sum of all costs incurred in producing goods or services
-includes workers salaries, rent |
total costs
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_____ analysis- because the time is too short to change the other factors of production, such as land, only labor can be changed.
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short run analysis
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In _____ analysis, in which other factors of production such as the size of a pumpkin patch can change as well as labor
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long run analysis
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____= a relationship that shows the quantity of output for any given amount of input
-tells how much is produced for each amt of labor input, given a fixed amt of land imput |
production function
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_____= increase in production that comes from an additional unti of labor
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marginal product of labor
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Another term for declining marginal product is ____________.
-occurs when some inputs to production, such as land or machines, are fixed -ex; hiring more workers is initially very helpful, bc the workers have tasks, but as more and more workers are employed on a given amt of land, there are fewer tasks for each to do -situation i which the increase in output to a unit increase in labor declines with incresaing labor output; a decreasing marginal product of labor |
dimishing returns to labor
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___= costs of production that vary with the quantity of production
___ costs stay the same and must be paid no matter how many products are produced, or even if none at all ___= the change in total costs due to a one-unit change in quantity produced -increase in total costs associated with an additional unit of production |
variable cost
fixed cost marginal cost |
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__= an assumption that firms try to achieve the highest possible level of profits
-total revenue minus total costs, given their production function |
profit maximization
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___= the change in total revenue to to a one-unit increase in quantity sold
-additional,extra revenue that results from producing/selling one more unit of output |
marginal revenue
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The key condition for profit maximization for a firm: the firm will choose a quantity to produce so that marginal revenue _____ marginal cost
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equals
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The ____ can be obtained by adding up the supply curves of all the INDIVIDUAL firms in the market
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market supply curve
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__= difference btw the margnial cost of an item and price received for it
-difference btw the price received by a firm for an additional item sold and the margnial cost of the items' production -for the market as a whole, it is the sume of all individuals firms' producer surpluses, or the area above the market supply curve and below market price -measure of how much a producer gains from the market |
producer surplus
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