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14 Cards in this Set

  • Front
  • Back
total revenue
price times quantity
determinants of price elasticity of Demand
1. # and availability of substitutes
2. time in which to make purchase
3. proportion of budget
4. importance of item
other types of elasticity
1. income elasticity (% change Qd/% change income - + normal)
2. cross-price elasticity
(% change Qd of good x/% change P of good y)
consumer equillibrium
1. spend all money
2. MUx/Px = MUy/Py
economic profit
total revenue - economic cost
accounting profit
total revenus - accounting cost
types of firms
sole proprietorship
normal rate of return
1. economic profit = 0
2. accounting profit = opportunity cost of capital
3. did just as well as in nextbest industry
short run costs
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
long run
period of time it takes for all inputs to become variable. aka the planning horizon.
fixed costs
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
variable costs
a cost that varies in the same direction as output
Law of Diminishing Marginal Returns
assing more and more of a variable input to a fixed input that results in smaller additions to output
factors that shift cost curves
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)