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Definition
| Whenever you make a decision, whatever you could have done otherwise |
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Definition
| There is a pattern you can look at to figure out what you are going to do |
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Definition
| Whatever it is that people want |
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Definition
1. Has to do with income A normal good is a good people want more of when their income goes up |
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Definition
| When customers income goes up, people buy less |
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Term
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Definition
Margerine/Butter The price of one product goes up and makes the price of the substitute go up |
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Definition
PB&J If peanut butter gets more expensive, jelly gets cheaper |
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Term
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Definition
| At a high price more is supplied, at a low price more is demanded |
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Definition
| At a higher price less is demanded, at a lower price more is demanded |
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Term
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Definition
| at each price, how much will be supplied |
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Term
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Definition
| at each price how much will be demanded, how many people will buy at each price |
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Term
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Definition
| A price a which all mutual trade have been made, when the supply and demand curve balance |
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Definition
| Anything that has opinion factored into it |
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Term
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Definition
| Based on fact, true or false, can be proven or disproven |
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Term
| Why would there be an increase/decrese in demand? |
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Definition
| The price decreased or the quantity increased |
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Term
| Why would there be an increase/decrease in supply |
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Definition
| The supply curve move left or right |
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Term
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Definition
| Total costs, fixed cost, variable cost |
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Term
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Definition
| Average variable cost, marginal cost, average fixed cost, total average cost |
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Term
| Which type of cost is zero when production is zer0? |
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Definition
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Term
| Which type of cost is the same regardless of how much is produced? |
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Definition
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Term
| What is the cost of producing one more unit called? |
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Definition
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Term
| What is the relationship between MC and ATC? |
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Definition
| Marginal cost is the average total cost at the LOWEST average total cost |
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Term
| If a firm has fixed costs of $14,000, and at its current level of production it has total costs of $25,000, what are its variable costs? |
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Definition
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Term
| demand elasticity provides information on what? |
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Definition
| How quantity demanded responds to price |
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Term
| What characteristics in a market can make PeD greater(more elastic)? |
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Definition
1. how much competition there is 2. percentage of income 3. long term? 4. Luxury |
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Term
| How do more competitors effect demand? |
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Definition
| Demand becomes more elastic |
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Term
| Neccesities have a demand which is???? |
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Definition
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Term
| What happens to demand when you have less time to adjust? |
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Definition
| Demand becomes less elastic |
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Term
| If price goes up from $2-$3, what % change is that? |
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Definition
| find the number in between the price chnage (in this case 2.50 because the price raised from 2 to 3. Then, you divide the price change ($1 in this problem) by the number that falls in the middle of the price change. Therefore 1.00/2.50=40% |
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Term
| If quanityt demanded goes up from 100-200, what percent change is that? |
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Definition
When finding % change in quantity, you always divide quantity by price. 100/150=.67 |
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Term
| What does income elasticity measure? |
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Definition
| Quantity responding to income |
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Term
| Who bears a larger portion of any tax? |
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Definition
| DEpends on elasticity. If the supply is more inelastic than the demand, the supplier eats the tax. If demand is more inelastic, vice versa |
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Term
| Number of sellers in a perfectly competitive market |
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Definition
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Term
| Perfectly Competitive - products |
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Definition
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Term
| Perfectly Competitive - Entry/Exit |
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Definition
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Term
| Perfectly Competitive - Price and Quantity |
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Definition
| Price as low as possible, make as much as we can possibly produce |
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Term
| Perfectly Competitive - Long Run Profits |
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Definition
| Profits should equal zero in the long run |
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Term
| Perfectly Competitive - Key Concept(price related) |
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Definition
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Term
| Perfectly Competitive - Examples |
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Definition
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Term
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Definition
Number of sellers-one
Products-one
Entry/exit-difficult or impossible
P and Q-high price, low quantity
Long-run profits-yes
Key concept-price maker, can set their own price because they have market power
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Term
| Monopolistic Competition: |
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Definition
Number of sellers-Many
Products-different products
Entry/exit-free entry and exit
Long-run profits-no
P and Q-price is higher then purely compet, quant is lower
Key concept (product related)-product differentiation
Examples: shoe companies, restaurants
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Term
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Definition
Number of sellers-few (under 5)
Products-similar
Entry/exit-easier than monopoly, some dangers
Long-run profits-if they cooperate, expect long run profits
P and Q-higher if they cooperate well, quant low if the cooperate well
Key concept (product related)-interdependent companies
Examples: airlines, tobacco companies, major labels
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Term
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Definition
| Value that we could have gotten but it does not ever happen |
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Term
| What does the government do about deadweight loss? |
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Definition
| Split up companies, regulate, take over companies, ignore the problem |
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Term
| why do firms in monopolistically competitive markets advertise? |
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Definition
| to differentiate from other products |
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Term
| Opponents of advertsing would say? |
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Definition
| advertising is expensive and it gives up resources |
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Term
Which curve can graphically tell you for certain what the market type is? |
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Definition
| Demand curve. Flat= perfectly competitive |
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