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21 Cards in this Set

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