Microeconomics Mcconnell Brue Flyn 18Th Chptr 9

Front 1

1. Identify the four types of market models.

Back 1

p177

Pure competition
Pure Monopoly
monopolistic competition
ologopoly

Front 2

2.What are the major characteristics of pure competition?

Back 2

p177
Very large numbers
standardized product
price takers
Free entry and exit

Front 3

3.What is the difference between average revenue, total revenue, and marginal revenue?

Back 3

p178

average- cost paid by the consumer and received by the seller AVR REV=TR/Q
total--multiply price by the corresponding quantity the firm can sell TR=PXQ
marginal- is the change in the total revenue that results from sellingone more unit of output.MR

Front 4

4.What is the break-even point?

Back 4

p180
an output at which a firm makes a normal profit but not an economic profit.

Front 5

5.Identify two different approaches used to determine short-run profit maximization.

Back 5

p179-

total revenue-total-cost-approach

marginal-revenue-marginal-cost Approach

Front 6

6.Describe the MR=MC Rule.

Back 6

p182 maximize total profit., the firm will maximize profit or minimize loss by producing the output at which marginal revenue equals marginal cost.(as long as the product is preferable to shutting down)

Front 7

7.Under what conditions should a firm shut down?

Back 7

p185
when the market yeild price is lower than the production cost.

If your AVC average variable cost greater the the cost to produce AVC>P

Front 8

8.What happens to economic profits when firms enter an industry? When they leave an industry?

Back 8

p190

product increases, pushing the price below

industry supplies decrease, pushing the price up.

Front 9

9.Describe the differences between a constant-cost industry, an increasing-cost industry, and a decreasing-cost industry.

Back 9

p192
constant-cost- no matter how much you make the cost does not change per unit
increasing cost- resources are in demand therefore the cost of the unit will rise.
decreasing cost-using new technology to expand and lower the cost.

Front 10

10.How are productive efficiency and allocative efficiency determined mathematically?

Back 10

p195
Productive- P=minimum ATC
want to make it a cheap as possible. ATC need to be lower
Allocative-P=MC
making the things that the consumer wants to buy. Makeing the right kind of stuff

Front 11

12. How do the economic concepts in this chapter apply to generic drugs?

Back 11

p196
The supply increases causing the price to drop.

Front 12

pure competition

Back 12

P177
involves a very large number of firms producing a standaradized product.(cotton, cucumber) New firms can enter and exit the industry very easily

Front 13

Pure Monopoly

Back 13

P177
is a market structure in which one firm is the sole seller of a product or service.(local electric)

Front 14

Monopolistic competition

Back 14

is charactized by a relatively large number of sellers producing differentiated products (clothing, furniture books)

Front 15

Oligopoly

Back 15

P177
involves only a few sellers of a standardized differentiated product, so each firm is affected by the decisions of its rival and must take those decisions into account in determining its own price and output.