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13 Cards in this Set
- Front
- Back
Allocative Efficiency |
A state of the economy in which production is in accordance with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it. |
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Average Revenue (AR) |
Total revenue divided by the quantity of the product sold. |
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Economic Loss |
The situation in which a firm's total revenue is less than its total cost, including all implicit costs. |
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Economic Profit |
A firm's revenues minus all its costs, implicit and explicit. |
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Long-Run Competitive Equilibrium |
The situation in which the entry and exit of firm's has resulted in the typical firm breaking even. |
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Long-Run Supply Curve |
A curve that shows the relationship in the long run between market price and the quantity supplied. |
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Marginal Revenue (MR) |
The change in total revenue from selling one more unit of a product. |
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Perfectly Competitive Market |
A market that meets the conditions of: (1) many buyers and sellers, (2) all firm's selling identical products, and (3) no barriers to new firms entering the market. |
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Price Taker |
A buyer or seller that is unable to affect the market price. |
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Productive Efficiency |
A situation in which a good or service is produced at the lowest possible cost. |
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Profit |
Total revenue minus total cost. |
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Shutdown Point |
The minimum point on a firm's average variable cost curve; if the price falls below this point, the firm ***** down production in the short run. |
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Sunk Cost |
A cost that has already been paid and cannot be recovered. |