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