Microeconomics Final
What is the equation for total fixed cost
TFC=(ATC)(Q)
Everything on the indifference line gives (utility)
same amount
an increase in income will cause a consumer's budget constraint to
shift outward, parallel to the initial position
a budget constraint
shows the consumption bundles that a consumer can afford
if an increase in the price of blue jeans leads to an increase in the demand for tennis shoes, then jeans and shoes are
substitutes
which cost curve is continually upward-sloping
the average total cost curve
What is the equation of the budget line?
p1x1 + p2x2 <= m
The price elasticity of demand measures
the responsiveness of the quantity demanded to change in price
in order to minimize losses in the short run, a competitive firm should shut down if
the total revenue is less than the total variable cost
what is the equation for total cost?
average total cost times quantity
what is the equation for total variable cost?
average variable cost times quantity
What is the equation for average marginal curve
msrginsl msgnitude/ mag
what's the equation for total fixed cost?
total cost - total variable cost
Equation for profit
total revenue - total cost
a consumer that does not spend all of her income
would be at the point inside of her budget constraint
Suppose you are told that own-price elasticity of supply equals 0.5. What would be the increase in price and increase in demand?
1% increase in price, 0.5% increase in demand
if own-price elasticity of demand equals 0.3 in absolute value, then what percentage change in price will result in 6% decrease in quantity demanded
20%
suppose that a 2% increase in price results in a 6% decrease in quantity demanded , own price of elasticity is equal to
3
What is the equation for average total cost
ATC=AFC(Q) , TC/Q
Marginal Utility
Change in total utility / Change in quantity
Marginal utility is the
Change in total utility that results from increasing the amount of a good consumed by one unit
What is the indifference curve and its slope?
Marginal rate of substitution (-p1/p2)
What is the equation for total cost?
TC= Total fixed cost + total variable cost
What is the equation for average variable cost?
TVC/Q
When do you maximize profit in perfect competition?
When marginal revenue is equal to marginal cost
When should companies continue to produce?
When the total revenue is greater than the total variable cost
When should companies shut down?
When the total revenue is less than the total variable cost
whenever marginal cost is above average total cost
average total cost is increasing
when the price of a goof increase, ceteris paribus, the higher price
contracts the consumer's set of buying opportunities
the law of demand states that an increase in the price of a good
decreases the quantity demanded for that good along with the demand curve
What does total cost include
explicit and implicit costs
The rate at which a consumer is willing to substitute one good for another is measured by the
indifference map
how long is the long run
long enough that all costs can become variable
What does the point of tangency on the indifference curve mean?
maximum utility
What is the equation for total revenue?
price times quantity
What is the equation for profit
profit= (Revenue)- (Total Cost)
The rate at which a consumer is able to substitute one good for another is determined by the
ratio of prices of the goods (indifference curve)
if a consumer's income decreases, the budget constraint for pepsi and pizza will
shift inward, parallel to the old budget constraint
A typical indifference curve
shows all the combinations of goods that give a consumer the same level of utilitity
the theory of consumer choice provides the foundation for understanding
the firm's product demand
What is the maximization of utility of the indifference curve
the highest indifference curve
an optimizing consumer will select the consumption bundle in which
the marginal rate of substitution is equal to the relative price