ECON FINAL

if the marginal revenue associated with selling one more unit of output is positive, the demand is:

elastic, because this would increase total revenue

a business will charge a _____ price to the group with the relatively more elastic demand and a _______ price to the group with the relatively more inelastic demand

lower higher

a profit that indicates that the firm is doing just as well as it would have if it had chosen to use its resources to produce a different product or to compete in a different industry

normal profit

the price that occurs where the demand and the average total cost curves cross is called the:

normal profit price

the demand curve faced by a perfectly competitive firm is

perfectly elastic

allocative efficiency is

producing the goods and services so that their marginal benefit equals their marginal cost

normal profit is also known as

zero economic profit

an argument can be made that the economic profits generated by pure monopolies have two positive impacts on dynamic growth

1. potential economic profits give firms and entrepreneurs incentives to develop new production processes and products 2. when a monopoly earns an economic profit, it has the financial capital to develop more innovations

the allocatively efficient level of output occurs where:

P=MC

to calculate profit which three pieces of information need to be identified?

quantity of output, price, average total cost

the price that occurs where the demand and the marginal cost curve cross is called the :

regulated competitive price

economic profit

total revenue minus the implicit and explicit costs of production