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39 Cards in this Set

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relationshop between the lowest attaaniable average total coast and output when both the plan and labor are varied
long run average cost curve
features of a firms technology that lead to a falling long run avg cost as output increases
economies of scale
features of a firms technology that lead to a rising long run avg cost as output increases
diseconomies of scale
features of a firms technology that lead to a constant long run avg cost as output increases
constant returns to scale
smalles quantity of output at which the long run avg cost reaches the lowest level
minimum efficent scale
what are the four characteristics of perfect competition?
1. many firms sell identical products to many buyers
2. no restrictions to entry
3. established firms have no advantages over newer ones
4. sellers and buyers are well informed about prices
what two conditions does perfect competition arise?
1. firms min efficent scale is small relative to market demand so there is room for more in the industry
2. goods or services have no unique characteristics so consumers dont care which firm they buy from
firms that cannont influence the price of a good or service
price taker
the price and quanity at which it is indifferent between producing and shutting down

point where avc is at its minimum and also where mc curve crosses avc curve
shutdown point
what are the two characteristics about a monopoly?
restrictions to entry and a good or service with no close substitutes
what are the three barriers to entry of a monopoly?
1. naturally monopoly
2. ownership barriers
3. legal barriers
industry in which economies of scale enable one firm to supply the entire market at the lowest possible cost
natural monopoly
occurs if one firm owns a significant portion of a key resource
ownership barrier
a market in which competition and entry are restricted by the granting of public franchise and patents of copyrights
legal monopoly
firms must sell each unit of its outputs for sam price to all its customers
single- price monopoly
practice of selling different units of a good or service for different prices.
price discrimination
true or false monopoly demand is always elastic
true
a company must___________ and ________ to be able to price discriminate
indentify and seperate different buyer types AND sell a product that cannot be resold
A perfectly competitive firms shutdown point occurs when the firms?
revenue just equals its total variable cost
A perfectly competitive firm is definitely earning an economic profit when?
Price > average total cost
In the long run fixed cost are _____ and variable cost are____
zero; positive
in the short run fixed cost are positive or negative?
positive
in a perfectly competitive market that is in long run equilibrium a permanent leftward shift in the market demand cure leads to?
firms leaving the industry in the long run
if price falls bellow the minimum point on avc, the best a perfecclty competitive firm can do is?
shutdown and incurn an economic loss equal to total fixed cost
in perfect competition the firms revenue curve is?
the same as the demand curve
in the short run a perfecctly competitive firm will shut down if?
price is < AVC
a perfectly competitive firm is producing at the point its marginal cost equals its marginal revenue. If the firm boosts its out, its total revenue will ____ and its profit will____?
rise; fall
for any perfectly competitive firm marginal recvenue is?
equal to price
in perfect competition a firm maximizes its economic profit if it produces the output at which?
price equals marginal cost
in the short run a perfectly competitive firms economic profit can either be?
positive, negative, or zero (normal profit)
perfect competition arises if the ______ efficent scale of a single producer is______ relative to the demand for the good or service
minimum; small
A natural monopoly under rate of return regulation has an incentive to?
pad its costs
for a single price monoply the demand curve lies
aboce the marginal revenue curve
a price discriminating monopolist produces more outout than that produced by>
a single price monopolist
a single price monopoly produces less output than it would if it could?
price discriminate
if a monopolist can perfectly price discriminate it will?
charge a different price for every unit sold
producer surplus is equal to?
producers revenue minus the opportunity cost of production
A monopoly firm expands its output and lowers its price . The firm finds that total revenue falls hence the firm is producing in the?
inelastic range of the demand curve
if a monopolist is maxing profits then it is producing an amount of output so that
mr=mc