micro
normal profits =
implicit cost
In terms of CS and PS, a price ceiling will typically _______ CS and ________ PS. CS will increase if K>M
increase decrease
The supply curve is upward sloping because of ________ marginal costs
increasing
fixed input
input quantity is fixed and cannot be varied
A downward sloping demand shows that people are ______ willing to pay if value is less than what you pay for it; it shows decreasing marginal _______
less; utility
diminishing marginal returns
extra benefit of consuming one more good
marginal
extra cost from producing an additional unit
marginal product of labor
extra output from an additional worker
marginal utility
extra utility from consuming an additional unit
non-satiation
for any amount of a good or service more is preferred to less. (also at larger amounts of that good or service)
How to find Consumer Surplus How to find Producer Surplus
half the base times the height
If each additional unit costs more to produce than the last, the firm will only accept a ________ price for each additional unit produced
higher
When price goes up, CS ________ and PS ________, ceteris paribus
decreases increases
Willingness to pay represents the _________ curve
demand
perfectly competitive
-many buyers and suppliers, price takers. (no market power) -homogeneous (Alike) product -easy entry and exit ( no patents or barriers ) (EX: pizzerias and landscapers)
Law of diminishing marginal utility slopes
Down
ratios
MP>AP- increase AP MP<AP- decrease AP MP=AP-MAX AP
accounting profits
TR-ACC. (explicit cost )
economic profits
TR-economic cost (implicit+explicit)
average product
The outputs per unit of inputs
Law of diminishing marginal returns slopes
Up
long run
all inputs can be varied
explicit (accounting cost)
anything you pay many for by the firm
law of diminishing marginal return
as one consumes more of a good the extra satisfaction will tend to decline
short run
at least one input is fixed
Deadweight Loss
consumer surplus or producer surplus that disappears and is transferred to nobody
consumer surplus
customers willingness to pay for a good is the max price that they would buy it for
The height of the supply curve represents the _______ price that _________ are willing to _____ when producing and selling that specific quantity supplied lowest;
maximum producers; accept
implicit
operating cost of the owners time and resources. (Next best thing)
utility
pleasure you receive from consuming goods
producer surplus
sellers cost is the lowest price at which they are willing to sell a good
Price ceilings and floors can cause ______ and _______.
shortages; surpluses
Increasing marginal costs
shows an upward sloping supply curve
Willingness to sell at a given price or the lowest price a producer is willing to accept for a unit produced shows
the supply curve