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14 Cards in this Set
- Front
- Back
total revenue
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price times quantity
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determinants of price elasticity of Demand
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1. # and availability of substitutes
2. time in which to make purchase 3. proportion of budget 4. importance of item |
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other types of elasticity
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1. income elasticity (% change Qd/% change income - + normal)
2. cross-price elasticity (% change Qd of good x/% change P of good y) |
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consumer equillibrium
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1. spend all money
2. MUx/Px = MUy/Py |
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economic profit
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total revenue - economic cost
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accounting profit
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total revenus - accounting cost
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types of firms
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sole proprietorship
partnership corporation |
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normal rate of return
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1. economic profit = 0
2. accounting profit = opportunity cost of capital 3. did just as well as in nextbest industry |
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short run costs
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1. some costs may be there and NOT change (regardeless of decisions made)
2. certain costs are fixed (rent, etc.) 3. no entry or exit 4. amount of time insufficient to allow the usage of all inputs to vary |
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long run
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period of time it takes for all inputs to become variable. aka the planning horizon.
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fixed costs
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1. can't vary in short term
2. don't change as output changes 3. still exist when output =0 4. usually associated with capital |
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variable costs
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a cost that varies in the same direction as output
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Law of Diminishing Marginal Returns
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assing more and more of a variable input to a fixed input that results in smaller additions to output
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factors that shift cost curves
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1. change in technology (tech. improves, cost goes down)
2. change in input prices (input prices and costs move together) 3. change in regulation (taxes) (taxes and costs move together) |