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### 21 Cards in this Set

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 what is The Production Function specifies the maximum amount of output that a firm can produce with a given quantity of inputs for a given state of technology. what is The Law of Diminishing Returns states that if we vary one of the inputs, keeping all other inputs as well as the technological level constant, then, at least after some point, successive additional units of the variable input will add less and less to the Total output. That is, the Marginal Product of each additional unit of the variable input will decrease as the amount of that input increases, all else equal. What is the Short Run is defined as a period of time in which only the variable inputs, such as labor and materials, could be adjusted. what is the Long Run is defined as a period of time in which all inputs, including fixed factors, such as capital, could be adjusted. What are Fixed Costs (FC) are the costs that the firm has to pay even is it does not produce anything. Fixed costs do not depend on the level of output produced What does the Total Cost (TC) represent? resents the total amount of money spent in al l the inputs required for the a business firm on order to produce a given level of output. What are Variable Costs, (VC) are the costs that vary and are directly related to output what is Marginal Cost (MC) as the additional expenditure that a firm has to incur in order to produce one more unit of output. What is Average Cost the ratio between the Total cost and the quantity produced. AC = TC/Q What is Average Fixed Cost (AFC) is defined as the ratio between fixed costs and quantity of output produced: AFC = FC/Q what is Average Variable Cost (AVC) is defined as the ratio between fixed costs and quantity of output produced: AVC = VC/Q What is The Balance Sheet is a statement of the financial condition of the firm at a certain point of time. It lists the Assets of the firm (things that the firm owns), the Liabilities of the firm (things that the firm owes), and the Net Worths of the firm (the difference between assets and liabilities): Net Worth = Assets - Liabilities What is The Income Statement is a statement of the financial performance of the firm over a certain period of time. It lists the Revenue of the firm, the Costs of the firm, and the Profits of the firm, which are defined as difference between the revenue and the costs. Profits = Revenue −Costs The Income Statement is a statement of the financial performance of the firm over a certain period of time. It lists the Revenue of the firm, the Costs of the firm, and the Profits of the firm, which are defined as difference between the revenue and the costs. Profits=Revenue −Costs What is Perfect Competition is defined as a market setting involving large number of profit-maximizing firms that sel l a homogeneous product and cannot individually affect the market price. Furthermore, free entry and exit are assumed in a perfectly competitive market structure. When does Imperfect competition happen prevails in an industry where individual sel lers have some control over the price of their output. When does Monopoly exists? when a single firm is the sole producer of a product for which there are no close substitutes. When does Oligopoly exists when a few large firms producing a homogeneous or differentiated product dominate a market. What is Monopolistic competition is a market structure in which a relatively large number of sellers offer similar but not identical products. What are Barriers to entry are the factors that prevent new firms from entering an industry. What are cartels is a group of producers that creates a formal written agreement specifying how much each member will produce and charge. Such as OPEC What is price discrimination occurs when a given product is sold at more than one price and the price differences are not based on cost differences.