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21 Cards in this Set
- Front
- Back
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What is EFFICIENT? Or also known as (Pareto Efficient)?
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A situtation is efficient if no change is possible that will help some people without harming others.
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What is Deadweight Loss?
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The reduction in total economic surplus that results from the adoption of a policy.
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What is Profit?
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The total revenue a firm receives from the sale of its product minus all costs-explicit and implicit-incurred in producing it.
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What is Profit-maximizing firm?
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A firm whose primary goal is to maximize the difference between its total revenues and total costs.
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What is a perfectly competitive market?
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A market in which no individual supplier has significant influence on the market price of the product.
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What is a price taker?
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A firm that has no influence over the price at which it sells its product.
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What is an imperfectly competitive firm?
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A firm that has at least some control over the market price of its product.
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What is a factor of production?
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An input used in the production of a good or service.
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What is a short run?
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A period of time sufficiently short that at least some of the firm's factors of production are fixed.
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What is a long run?
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A period of time of sufficient length that all the firm's factors of production are variable.
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What is the law of diminishing returns?
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A property of the relationship between the amount of a good or service produced and the amount of a variable factor required to produce it; it says that when some factors of production are fixed, increased production of the good eventually requires ever-larger increases in the variable factor.
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What is the fixed factor of production?
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An input whose quantity cannot be altered in the short run?
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What is variable factor of production?
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An input whose quantity can be altered in the short run.
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What is fixed cost?
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The sum of all payments made to the firm's fixed factors of production.
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What is variable cost?
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The sum of all payments made to the firm's variable factors of production.
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What is total cost?
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The sum of all payments made to the firm's fixed and variable factors of production.
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What is marginal cost?
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As output changes from one level to another, the change in total cost divided by the corresponding change in output.
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What is Average variable cost (AVC)?
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Variable cost divided by total output.
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What is Average Total Cost (ATC)?
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Total cost divided by total output.
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What is Profitable firm?
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A firm whose total revenue exceeds its total cost?
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What is producer surplus?
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The amount by which price exceeds the seller's reservation price.
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