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