Econ Concepts Test #2

Front 1

total revenue

Back 1

price times quantity

Front 2

determinants of price elasticity of Demand

Back 2

1. # and availability of substitutes
2. time in which to make purchase
3. proportion of budget
4. importance of item

Front 3

other types of elasticity

Back 3

1. income elasticity (% change Qd/% change income - + normal)
2. cross-price elasticity
(% change Qd of good x/% change P of good y)

Front 4

consumer equillibrium

Back 4

1. spend all money
2. MUx/Px = MUy/Py

Front 5

economic profit

Back 5

total revenue - economic cost

Front 6

accounting profit

Back 6

total revenus - accounting cost

Front 7

types of firms

Back 7

sole proprietorship
partnership
corporation

Front 8

normal rate of return

Back 8

1. economic profit = 0
2. accounting profit = opportunity cost of capital
3. did just as well as in nextbest industry

Front 9

short run costs

Back 9

1. some costs may be there and NOT change (regardeless of decisions made)
2. certain costs are fixed (rent, etc.)
3. no entry or exit
4. amount of time insufficient to allow the usage of all inputs to vary

Front 10

long run

Back 10

period of time it takes for all inputs to become variable. aka the planning horizon.

Front 11

fixed costs

Back 11

1. can't vary in short term
2. don't change as output changes
3. still exist when output =0
4. usually associated with capital

Front 12

variable costs

Back 12

a cost that varies in the same direction as output

Front 13

Law of Diminishing Marginal Returns

Back 13

assing more and more of a variable input to a fixed input that results in smaller additions to output

Front 14

factors that shift cost curves

Back 14

1. change in technology (tech. improves, cost goes down)
2. change in input prices (input prices and costs move together)
3. change in regulation (taxes) (taxes and costs move together)