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42 Cards in this Set

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Marginal Cost (MC)
The additional cost of producing one more unit of output
Total fixed Cost (TFC)
Costs that must be paid whether a firm produces or not
Total Variable Costs (TVC)
Coust that rise or fall as production rises or falls
Total Costs (TC)
The sum of total variable and total fixed costs
Short Run Average Total Costs (SRATC)
The total cost of production divided by the total quantity of output producded when at least one resource is fixed.
Scale
Size; all resources change when scale changes
Long-run average total Cost (LRATC)
The lowest-cost combination of resources with which each lovel of output is produced when all resources are available.
Economies of Scale
The decrease in per unit costs as the quantity of production increases and all resources are variable.
Diseconomies of Scale
The increase in per unit costs as the quantity of production increases and all resources are variable.
Constant Returns to Scale
Unit costs remain constant as the quantity of production is increased and all resources are variable.
Minimum efficient Scale
the minimum point of the long-run average cost curve; the output level at which the cost per unit of the output is the lowest.
Economic Profit
Total revenue less total costs, including all opportunity costs
Accounting Profits
Total revenue less total costs, excluding all opportunity costs
Negative Economic Profit
Total Revenue is less than total costs when total costs include opportunity costs
Zero Economic Profit
Total revenue is equal to total costs when total costs include all opportunity costs
Normal Accounting Profits
Zero Economic Profits--the Normal Rate of Return (e.g., interest rate from the bank)
Positive Economic Profit
Total Revenue is greater than total costs when total costs include all opportunity costs.
Total Physical Product (TPP)
The max output that can be produced when successive units of a variable resource are added to fixed amounts of other resources.
Law of Deminishing Marginal Returns
When succive equal amounts of a variable resource are combined with a fixed amoutn of another resourced, marginal increases in output that can be attributed to each additional unit of the variable resource will eventuall decline.
Average Physical Product
Output per unit of a resource
Marginal Physical Product
The additional quantity that is produced when one additional unit of a resource is used in combination with the same quantity of all other resources.
Average Total Cost (ATC)
Per unit cost; total costs divided by the total output.
Marginal Revenue
The amount the firm receives for selling one more unit of its product.
Perfect Competition
A market structure in which many firms produce identical products and entry is easy. Each firm is a price taker. In the long run, firms in this structure earn normal profits
Profit Maximization
Occurs where MR = MC
Break Even Price
A price that is equal to the minimum point of the average total cost curve.
Economic Efficiency
When the price of a agood or service just covers the marginal cost of producing (productive efficiency) that good and people are getting wha t they want (allocative efficiency)
Monopoly
A market structure in which there is a single supplier of a product (which has no close substitute). The monopolist has the market power to set prices
Barrier to entry
Anything that impededs the ability of firms to bgin a new business in an industry in which existing firms are earning postivie economic profits.
Natural monopoly
A monopoly which arises due to economies of scale
Regulated Monopoloy
A monopoly whose behavior is monitored and prescribed by a government entity.
Price discrimination
Charging different customers at different prices for the same products.
Monopolistic Competition
A market structure with a large number of firms producing differentiated products and entry/exit is not difficult
Non-price competion
When firms vie for consumer attention, but not with lower prices. Firms may use advertising, packaging, branding, etc.
Product differentiation
When a firm makes their good or service SLIGHTLY different from others in the same basic market.
Game Theory
A new branch of economic theory built upon models of multiactor strategic behavior
Dominant Strategy
A strategy that producers better results no matter what strategy the opposing firm follows.
Cartel
An organization of independent firms whose purpose is to control and limit production to increase price and profits.
Anti-trust policy
Government policies and programs designed to control the growth of monopoly and enhane competition.
Market Concentration
The degree to which a few frms control the output of a particular market.
Economic Regulation
The proscription of price and output for a specific industry.
Social Regulation
The prescribing of health, safety, performance and environmental standards that apply across several industries.