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### 28 Cards in this Set

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 In the table, average costs when quantity = 0 are crossed out. Why? Because you can’t divide by 0 In the table, marginal costs when quantity =0 is crossed out. Why? Because you can’t increase production from a negative amount to zero. Consider Figure 1 (last page of test). What type of market is this? Purely competitive market In Figure 1 ATC has a U shape because AVC has a U shape In Fig. 2 which MR curve shows the firm earning an economic loss and shutting down in the short run? MR4 The place where every firm will operate in order to maximize profits is Where MC = MR In Fig. 1 which curve also is the firm’s demand curve? MR In Fig. 1 which curve also is the firms supply curve? MC Consider the market in Fig 3. What market is this? Monopoly The firm in Fig. 3 is a ________ while the firm in Fig. 1 is a ________. Price searcher, price taker In Fig. 3, ACE is Competitive consumers surplus In Fig. 3 PBDE IS Profit captured from consumer’s surplus In Fig. 3 BCD is Dead weight loss What type of market is figure 4? Monopolistically competitive market In fig 4, P2BYX represents Economic profit Free entry and exit larger number of buyers and sellers, homogeneous/ heterogeneous goods and perfect information. Which market do these characteristics not describe? Monopoly A group of firms which come together and act like a monopoly: Cartel If at quantity = 200, ATC= \$15, and AVC=\$10, TFC would =? 1401-1800 The theory of regulation which says that regulations are passed not to benefit the public but to benefit the industry being regulated: Capture theory The theory of regulation which says that regulations are passed to correct market failures: Public interest theory The theory of regulation which says that monopolies and very competitive industries most want to be regulated: Economic theory of regulation ala Stigler/Peltzman Section 1 of the Sherman Antitrust Act of 1890 says Price fixing is illegal Section 2 of the Sherman Antitrust Act says Monopolization of the attempt to monopolize is a felony Section 2 of the Clayton Act says Price discrimination is illegal There are 3 types of mergers. Which type describes a producer merging with a supplier? Vertical merger In a purely competitive market the firm owner is a Price taker Why does ATC have a 'U' shape? Because AVC has a 'U' shape What is the only antitrust crime which will put you in jail? Sect. 1 of the Sherman Act