Micro Review Set

Front 1

Marginal Cost (MC)

Back 1

The additional cost of producing one more unit of output

Front 2

Total fixed Cost (TFC)

Back 2

Costs that must be paid whether a firm produces or not

Front 3

Total Variable Costs (TVC)

Back 3

Coust that rise or fall as production rises or falls

Front 4

Total Costs (TC)

Back 4

The sum of total variable and total fixed costs

Front 5

Short Run Average Total Costs (SRATC)

Back 5

The total cost of production divided by the total quantity of output producded when at least one resource is fixed.

Front 6

Scale

Back 6

Size; all resources change when scale changes

Front 7

Long-run average total Cost (LRATC)

Back 7

The lowest-cost combination of resources with which each lovel of output is produced when all resources are available.

Front 8

Economies of Scale

Back 8

The decrease in per unit costs as the quantity of production increases and all resources are variable.

Front 9

Diseconomies of Scale

Back 9

The increase in per unit costs as the quantity of production increases and all resources are variable.

Front 10

Constant Returns to Scale

Back 10

Unit costs remain constant as the quantity of production is increased and all resources are variable.

Front 11

Minimum efficient Scale

Back 11

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.

Front 12

Economic Profit

Back 12

Total revenue less total costs, including all opportunity costs

Front 13

Accounting Profits

Back 13

Total revenue less total costs, excluding all opportunity costs

Front 14

Negative Economic Profit

Back 14

Total Revenue is less than total costs when total costs include opportunity costs

Front 15

Zero Economic Profit

Back 15

Total revenue is equal to total costs when total costs include all opportunity costs

Front 16

Normal Accounting Profits

Back 16

Zero Economic Profits--the Normal Rate of Return (e.g., interest rate from the bank)

Front 17

Positive Economic Profit

Back 17

Total Revenue is greater than total costs when total costs include all opportunity costs.

Front 18

Total Physical Product (TPP)

Back 18

The max output that can be produced when successive units of a variable resource are added to fixed amounts of other resources.

Front 19

Law of Deminishing Marginal Returns

Back 19

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.

Front 20

Average Physical Product

Back 20

Output per unit of a resource

Front 21

Marginal Physical Product

Back 21

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.

Front 22

Average Total Cost (ATC)

Back 22

Per unit cost; total costs divided by the total output.

Front 23

Marginal Revenue

Back 23

The amount the firm receives for selling one more unit of its product.

Front 24

Perfect Competition

Back 24

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

Front 25

Profit Maximization

Back 25

Occurs where MR = MC

Front 26

Break Even Price

Back 26

A price that is equal to the minimum point of the average total cost curve.

Front 27

Economic Efficiency

Back 27

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)

Front 28

Monopoly

Back 28

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

Front 29

Barrier to entry

Back 29

Anything that impededs the ability of firms to bgin a new business in an industry in which existing firms are earning postivie economic profits.

Front 30

Natural monopoly

Back 30

A monopoly which arises due to economies of scale

Front 31

Regulated Monopoloy

Back 31

A monopoly whose behavior is monitored and prescribed by a government entity.

Front 32

Price discrimination

Back 32

Charging different customers at different prices for the same products.

Front 33

Monopolistic Competition

Back 33

A market structure with a large number of firms producing differentiated products and entry/exit is not difficult

Front 34

Non-price competion

Back 34

When firms vie for consumer attention, but not with lower prices. Firms may use advertising, packaging, branding, etc.

Front 35

Product differentiation

Back 35

When a firm makes their good or service SLIGHTLY different from others in the same basic market.

Front 36

Game Theory

Back 36

A new branch of economic theory built upon models of multiactor strategic behavior

Front 37

Dominant Strategy

Back 37

A strategy that producers better results no matter what strategy the opposing firm follows.

Front 38

Cartel

Back 38

An organization of independent firms whose purpose is to control and limit production to increase price and profits.

Front 39

Anti-trust policy

Back 39

Government policies and programs designed to control the growth of monopoly and enhane competition.

Front 40

Market Concentration

Back 40

The degree to which a few frms control the output of a particular market.

Front 41

Economic Regulation

Back 41

The proscription of price and output for a specific industry.

Front 42

Social Regulation

Back 42

The prescribing of health, safety, performance and environmental standards that apply across several industries.