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30 Cards in this Set
- Front
- Back
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Production Function
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The relationship between the Q a firm uses (inputs) and the Q of output it produces --put TProduct on it.
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Fixed input
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An input whose quantity cannot be changed for a variable of time
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Variable Input
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An input whose Q can vary at any time.
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Long-run
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Time period for which all inputs are variable.
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Short-run
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Time period for which at least one input is fixed.
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Total Production Curve
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Shows how the Q of output depends on Q of the variable input, for a given Q of the fixed input
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Marginal Product
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Additional Q of output for one more unit of the input.
-initially increases due to specialization -decreases later due to diminishing returns to inputs |
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Diminishing returns to an input
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Each additional unit of an input has less marginal product.
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Fixed Cost
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A cost that doesn't depend on the Q produced.
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Variable Cost
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A cost that depends on the Q produced.
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Total Cost
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The sum of the fixed cost and variable cost at any Q.
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Total Cost Curve
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Shows how TC depends on Q produced.
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Marginal Cost
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Additional cost incurred from producing one more unit. Above AVC MC = to supply short-run curve
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Average Total Cost
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TC/Q
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U-shaped Cost curve
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Shows how TC falls at low levels and raises at high levels.
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Average Fixed Cost
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Fixed cost per unit (FC/Q)
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Average Variable Cost
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VC/Q
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Minimum-Cost output
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Q of output at which ATC is lowest, point where MC intersects it.
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Long-run average total cost curve
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Shows the relationship between output and ATC when FC has been chosen to minimize ATC at all Q of output.
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Increasing returns to scale
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When long-run average total cost declines as output increases. AKA economies of scale
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Decreasing returns to scale
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When long-run ATC increase as output rises. (Diseconomies of scale
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Constant returns to scale
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When long-rung ATC is constant as output rises.
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Network externality
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When the value of a good to an individual is greater when a larger group of people also use the good.
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Factors of production
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Land, labor, capital
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How quickly do the sxs of mumps resolve? what are the possible complications of mumps?
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1 week to 10 days; aseptic meningitis, ovarian, testicular inflammation (sterility), pancreatitis, or deafness
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3 things monopoly will do perfectly comp. wont???
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1)Produce smaller quantity
2)Charge a higher price 3)Earn a profit |
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Oligopolies two ways of competing
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1)Cournot Behavior: quantity competition --> when firms are restricted in how much they can produce
2)Bertrand: price competition --> cutting prices to capture larger market share; when firms have excess capacity |
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2 solutions to natural monopoly
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1)Public ownership
2)Price Regulation |
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Situation of monopolistic competition
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1)Large # of producers
2)Free entry and Exit 3)Differentiated products |
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Techniques to differentiate products
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-Location
-Quality -Style/Type (imperfect substitutes) |
