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34 Cards in this Set
- Front
- Back
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In perfect competition you shutdown when? |
If TR < VC |
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In a perfect competition graph you shutdown when? |
P < AVC |
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In perfect competition this firm's profit max level is what? What will this firm do? |
Profit max level = 0 Firm will shutdown |
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In a perfect competition scenario who will shutdown and who will remain open? |
Firm 1 - Shutdown Firm 2 - Open |
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Having at least one cost that is fixed means what? |
A cost in the short run |
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What does it mean if all the costs are variable? |
A cost in the long run |
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Inputs that were fixed in the short run become variable means what? |
A cost in the long run |
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One similarity between monopolistic competition and perfect competition in long run equilibrium is what? |
They both earn 0 economic profit. |
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Two differences between monopolistic competition and perfect competition in long run equilibrium is what? |
Monopolistic Competition - 1. P > MC making it inefficient 2. P=ATC (producing less output than the efficient scale) Perfect Competition - 1. P=MC making it efficient 2. P=Min ATC (Efficient Scale) |
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What is product variety externality? |
When a new firms enter, consumers gain surplus from the introduction of a new product. |
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What is a business stealing externality? |
When new firms enter, existing firms lose customers and profit. |
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This is the best strategy for the player given the strategies chosen by all other players. |
Nash Equilibrium |
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This is the best strategy chosen regardless of strategies chosen by other players. |
Dominant Strategy |
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What is ATC? |
Tells us the cost of a typical unit of output |
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What is MC? |
The cost of an additional unit of output |
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The price of monopoly is higher than what? |
Price of an Oligopoly, Monopolistic Competition, and Perfect Competition |
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The quantity produce by perfect competition is higher than what? |
Quantity of an Oligopoly, Monopolistic Competition, and a Monopoly. |
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In pricing who has the most efficient price? |
Perfect Competition |
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What has the the most social efficiency? |
Quantity of perfect competition |
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What are the 3 characteristics of monopolistic competition? |
1. Many buyers and sellers 2. Product Differentiation (Price Maker) 3. Free entry and exit (none or very low barriers to entry) |
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The sum of all the explicit cost is what? |
Accounting profit |
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The sum of all the explicit and implicit cost is what? |
Economic profit |
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In perfect competition Price and MR are what? |
Equal |
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Whenever MC is less than or below ATC what is happening to ATC? |
ATC is falling |
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Whenever MC is greater than or above ATC, what is happening to ATC? |
ATC is rising |
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What is the efficient scale? |
The quantity of output that minimizes ATC |
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What is profit max for perfect competition? |
MR=MC |
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What is the special rule only for perfect competition? |
Since P=MR, P=MC (Welfare Maximizing) |
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What is economies of scale? |
When LRATC falls as the quantity of output increases. |
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Determine if the following is monopolistic competition or monopoly, sells a differentiated product from its competitors |
Monopolistic Competition |
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Determine if the following is monopolistic competition or monopoly, Sole Seller and product has no close substitutions. |
Monopoly |
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Determine if the following is monopolistic competition or monopoly, has a marginal revenue and marginal cost less than price. |
Both |
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Determine if the following is monopolistic competition or monopoly, earns economic profit in the long run. |
Monopoly |
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Determine if the following is monopolistic competition or monopoly, entry in the long run. |
Monopolistic Competition |
