ECON exam 2

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tenorsextets
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128284
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ECON exam 2
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2012-01-28 21:27:10
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  1. price of elasticity of demand
    a measure of the responsiveness of the quantity demanded to changes in price
  2. elastic demand
    the price elasticity of demand is greater than one, so the percentage change in quantity exceeds the percentage change in price
  3. inelastic demand
    the price elasticity of demand is less than one so the percentage change in quantity equals the percentage change in price
  4. unit elastic demand
    the price elasticity of demand is one, so the percentage change in quantity equals the percentage change in price
  5. perfectly inelastic demand
    the price elasticity of demand is zero
  6. formula for the Price Elasticity of Demand (Ed)
    Ed= |% change in quantity demanded ÷ % change in price|
  7. total revenue
    the money a firm generates from selling its product
  8. income elasticity of demand
    a measure of the responsiveness of demand to changes in consumer income
  9. formula for Income Elasticity of Demand (Et)
    Et= % change in quantity demanded ÷ % change in income
  10. cross-price elasticity of demand
    a measure of the responsiveness of demand to changes in the price of another good
  11. formula for Cross-Price Elasticity of Demand (Exy)
    Exy= % change in quanitity of X demanded ÷ % change in price Y
  12. price elasticity of supply
    a measure of the responsiveness of the quantity supplied to changes in price
  13. formula for Price Elasticity of Supply (Es)
    Es= % change in quantitiy supplied ÷ % change in price
  14. perfectly inelastic supply
    the price elasticity of supply equals 0
  15. perfectly elastic supply
    the price elasticity of supply is equal to ∞
  16. Utility
    the satisfaction experienced from consuming a good
  17. Util
    one unit of utility
  18. marginal utility
    the change in total utility from one additional unit of a good
  19. law of diminishing marginal utility
    as the consumption of a particular good increases, marginal utility decreases.
  20. budget line
    the line connecting all the combinations of two goods that exhaust a consumer's budget
  21. budget set
    a set of points that includes all the combinations of two goods that a consumer can afford, given the consumer's income and the prices of the goods
  22. equimarginal rule
    pick the combinations of two activites where the marginal benefit per dollar for the first activity equals the marginal benefit per dollar for the second activity
  23. substitution effect
    the chnage in quantity consumed that is caused by a change in the relative priece of the good, with real income held constant
  24. income effect
    the change in quantity consumed that is caused by a change in real income, with relative prices held contant
  25. economic profit
    total revenue minus economic cost
  26. economic cost
    the opportunity cost of thte inputs used in the production process, equal to explicit cost plus implicit cost
  27. explicit cost
    a monetary payment
  28. implicit cost
    an opportunity cost that does not involve a monetary payment
  29. accounting cost
    the explicit cost of production
  30. accounting profit
    total revenue minus accounting cost
  31. marginal product of labor
    the change in output from one additional unit of labor
  32. diminishing returns
    as one input increases while the other inputs are held fixed, ouput increases at a decreasing rate
  33. total-product curve
    a curve showing the relationship between the quantity of labor and the quantity of output produced, ceteris paribus
  34. Fixed cost (FC)
    cost that does no vary with the quantity produced
  35. variable cost (VC)
    cost that varies with the quantity produced
  36. Short-run total cost (TC)
    the total cost of production when at least one input is fixed; equal to fixed cost plus variable cost
  37. average fixed cost (AFC)
    fixed cost divided by the quantity produced
  38. average variable cost (AVC)
    variable cost divided by the quantity produced
  39. Short-run average total cost (ATC)
    short-run total cost divided by the quantity produced; equal to AFC plus AVC
  40. Short-run marginal cost (MC)
    the change in short-run total cost resulting from a one unit increase in output
  41. long-run total cost (LTC)
    the total cost of production when a firm is perfectly flexible in choosing its inputs
  42. long-run average cost (LAC)
    the long-run cost divided by the quantity produced
  43. constant returns to scale
    a situation in which the long-run total cost increases proportionately with output, so average cost is constant
  44. long-run marginal cost (LMC)
    the change in long-run cost resulting from a one-unit increase in output
  45. indivisible input
    an input that cannot be scaled down to produce a smaller quantity of output
  46. economies of scale
    a situation in which the long-run average cost of production decreases as output increases
  47. minimum efficient scale
    the ouput at which scale economies are exhausted
  48. diseconomies of scale
    a situation in which the long-run average cost of production increases as output increases
  49. perfectly competetive market
    a market with many sellers and buyers of a homogeneous product and no barriers to entry
  50. price taker
    a buyer or seller that takes the market price as given
  51. firm-specific demand curve
    a curve showing the relationship between the price charged by a specific firm and the quantity the firm can sell
  52. break-even price
    the price at which economic profit is zero; price equals average total cost
  53. shut-down price
    the price at which the firm is indifferent between operating and shutting down; equal to the minimum average variable cost
  54. sunk cost
    a cost that a firm has already paid or committed to pay, so it cannot be recovered
  55. short-run supply curve
    a curve showing the relationship bwtween the market price of a product and the quantity of output supplied by a firm in the short run
  56. short-run market supply curve
    a curve showing the relationship between the market price and quantity supplied in the short run
  57. long-run market supply curve
    a curve showing the relationship between the market price and quantity supplied in the long run
  58. increasing-cost industry
    an industry in which the averge cost of production increases as the total ouput of the industry increases; the long-run supply is positively sloped
  59. constant-cost industry
    an industry in which the average cost of production is constant; the long-run supply curve is horizontal

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