Econ

Front 1

implicit costs

Back 1

not paid in money but represent oppotunity costs

Front 2

EXPLICIT COSTS

Back 2

those paid in money, eg.. wages

Front 3

normal profit

Back 3

the amount you need to susttain to maintain entrepreneurial ability

Front 4

rental rate of capital

Back 4

best forgone alternative of capital
the revenue a firm can get by renting its capital out to someone else

Front 5

profit greater than 0

Back 5

signal for firms to enter

Front 6

profit = 0

Back 6

no one leaves and no one enters, by accounting terms they are making $
where budgeted profit=actual profit

Front 7

profit<0

Back 7

firms exit

Front 8

marginal cost

Back 8

change in TC/change in Q

Front 9

Marginal product of labor

Back 9

delta Q/delta L
-when at highest, MC Labor is at lowest

Front 10

Marginal curve

Back 10

tell you how expensive the last unit of a good costs

Front 11

AVC

Back 11

average cost of all the variable units, if the units are all high then they are going to be above the MC curve

Front 12

Perfect competition

Back 12

-has many buyers and sellers ,
-firms sell an idnetical product
-no restictions on entry-established firms have no advantage over new firms
-sellers and buter are well informed anout prices

Front 13

economic efficiency

Back 13

when a firm produces a given output at least cost

Front 14

MR>MC

Back 14

profit increases as you produce more

Front 15

MR<MC

Back 15

if you produce more the ectra cost you incur to make more decreases profit-produce less not more

Front 16

MR=MC

Back 16

producing more leads to no change in profit, stop producing if marginal cost is high

Front 17

P>ATC

Back 17

profit is positive

Front 18

P=ATC

Back 18

profit is 0

Front 19

P<ATC

Back 19

profit is negative

Front 20

profit

Back 20

=TR-TC

or
=Q(P-ATC)

Front 21

Law of diminishing returns

Back 21

as a firm uses more od a carialbe input, with a given quantitiy of fixed inputs, the marginal product of the variable input eventaully decreases

Front 22

as more firms enter.,,

Back 22

supply increases, but the amount of quantity supplied by the existing firms goes down because the demand isn't as high and price eventually goes down

Front 23

a firm has a monopoly if

Back 23

they can produce something for which there are no close substitutes
-there are barriers to entry
the firm who owns this markey is the industry
-not price takesr

Front 24

a monopolist would never prduce at a point where,

Back 24

the demand curve is inelastic and MR-MC

Front 25

a firm will price dicriminate if

Back 25

it can identify and serpate different buyer types
it can produce a product that cannot be resold

Front 26

what happens when a monopolist perfectly price discriminates?

Back 26

there is no DWL and there is no CS.

Front 27

what happens when a monopolist does price disrimnate

Back 27

there is DWL because some consumers are willing to buy more but they are not willing to pay the price which the monopolist is changing

Front 28

externality

Back 28

a cost or enefit that arises from production and falls on someone other than the producer

Front 29

production externality

Back 29

the producer

Front 30

consumption externality

Back 30

the consumer

Front 31

negative externality

Back 31

impose external costs, a cost on someone other than the producer and the consumer

Front 32

positive externalityy

Back 32

impose a benefit

Front 33

positive production externality

Back 33

benefit from production falls on someone other than the producer.
Ex getting the trader joe store would get rid of the swewage in the city of granger

Front 34

begative prodcution externality

Back 34

pollution, if a person creates a product that polites, the pollution can be viewed as a cost to the communit

Front 35

negative consumption exxternality

Back 35

second hand smoke

Front 36

positive consumption externatliry

Back 36

knowledge: if yo learn, everyone around yo benefits, Going to church

Front 37

marginal private cost

Back 37

the cost the firms mays to produce one more unit

Front 38

marginal social cost

Back 38

the sum of marhinal ecternal and marginal profits

Front 39

how to decrease DWL in a perfectly competitive market that has externalities

Back 39

get the MPc curve to moce onto the Marginal social cost curve, by making it easy for the houses to sue the factory, The factory thinks about producing more, but they realize that the costs from being sued will be greater then their profits-let the factory own the houses, they may want to rent tthem out, etc
2. Impose a tax in the industry to get the original price at MPC to move to MSC, The tax rate becomes the marginal external cost.

Front 40

Pigovian tax

Back 40

the tax created to reduce MSC.

Front 41

ATC is U shaped because

Back 41

of the spreading of total fixed cost over a larger output
eventually diminishing returns

Front 42

economies of scale

Back 42

features of a firms techology that leads to long run aberage costs falling as output increases
-when present, LRAC slopes down

Front 43

Diseconomies of scale

Back 43

features of a firms technology that leas to rising long run average cost as the output increases, when present, the Long run AC increases,

Front 44

Constant returnds to scale

Back 44

features of a firms technolohy that leas to constantlong run aberage cost asoutput decreases
-when present LR AC is horixontal

Front 45

economic efficiecy

Back 45

when a firm uses more goods whicj cost less and less goods which cost more