microeconomics chapter 8 and 9
Oligopoly
3 or 4 large Firms, Single Barriers to entry and exit
short run
A period in which at least one input or factor of production is fixed.
long run
A time period long enough for a business to change all of its inputs (factors of production).
Diminishing Returns
As one input increases while the other inputs are held fixed, output increases at a decreasing rate
Average Cost Formula
Average Fixed Cost equals Total Fixed Cost divided by the quantity.
Average Total Cost Formula
Average Total Cost equals Average Fixed Cost plus Average Variable Cost.
diseconomies of scale
Long-run average total cost decreases as the quantity of output increases.
economies of scale
Long-run average total cost decreases as the quantity of the output increases.
Marginal Cost Formula
Marginal Cost equals the change in Total cost divided by the change in quantity.
Accounting Costs
are the Explicit Costs
Economic Costs
are the explicit costs plus its implicit costs
Total Fixed Cost
Costs of fixed inputs.
Profit Formula
Profit equals Total revenue divided by Total Cost.
Pure Monopoly
Single Seller, No close substitutes for the product, Barriers to entry.
Monopolistic Competetion
Small Firms, Different Products, Free Entry and Exit, Perfect Information
Competition or Perfect/Free Enterprises
Small Firms. Homogeneous Products, Free Enterprises, Perfect Information
fixed cost
The cost that is independent of the output level
Total Cost Formula
Total Cost equals Total Fixed Cost Plus Total Variable Cost.
Accounting Profits formula
Total Revenues minus Accounting Costs
Economic Profits formula
Total Revenues plus the Economic Costs
Marginal Revenue formula
Marginal Revenue equals Change in Total Revenue divided by Change in output.
Average Variable Cost formula
Average Variable Cost equals Total Variable Cost divided by the quantity.
marginal analysis
Comparing the additional benefits resulting from a decision with the marginal costs.
Total Variable Cost
Cost of the variable inputs.
Variable Cost
Cost that varies with the output level.
