a legally determined maximum price that sellers may charge
a legally determined minimum price that sellers may recieve
The additional benefit to a consumer from consuming one more unit of a good or service. A demand curve is also one of these curves.
the difference between the highest price a consumer is willing to pay for a good or service and the price the consumer actually pays
the additional cost to a firm of producing one more unit of a good or service. A supply curve is one of these curves.
the difference between the lowest price a firm is willing to accept for a good or service and the price it actually receives.
Equilibrium in a competitive market is ___________ _______________.
The sum of consumer surplus and producer surplus.
The reduction in economic surplus resulting from a market not being in competitive equilibrium.
increase producer surplus
decrease consumer surplus
cause a deadweight loss
increase consumer surplus
reduce producer surplus
cause a deadweight loss
Where buying and selling take place at prices that violate government price regulations. Can be caused by price ceilings and price floors.
result in a loss of consumer surplus
loss of producer surplus
the enjoyment or satisfaction that people receive from consuming goods and services. The goal of a consumer is to spend available income so as to maximize this.
the change in total utility a person receives form consuming one additional unit of a good or service
the Law of diminishing marginal utility
states that consumers receive diminishing additional satisfaction as they consumer more of a good or service during a given period of time.
the amount of income consumers have available to spend on goods and services.
the change in the quantity demanded of a good that results from the effect of a change in the price on consumer purchasing power
the change in the quantity demanded of a good that results from a change in price making the good more or less expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power
the processes a firm uses to turn inputs into goods and services
refers to a change in the ability of a firm to produce a given level of output with a given quantity of inputs
A firm's technology and the size of its factory, store, or office are fixed
a firm is able to adopt new technology and to increase or decrease the size of its physical plant
the cost of all the inputs a firm uses in production
costs that change as output changes
costs that remain constant as output changes
the highest valued alternative that must be given up to engage in an activity
a cost that involves spending money
A non-monetary opportunity cost
The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs is the firm's ___________ ___________.
Marginal product of labor
the additional output produced by a firm as a result of hiring one more worker
Law of diminishing returns
Specialization and division of labor cause the marginal product of labor to rise for the first few workers hired, but eventually this causes the marginal product of labor to decline.
Average product of labor
the total amount of output produced by a firm divided by the quantity of workers hired
Average fixed cost
equal to fixed cost divided by the level of output
average variable cost
equal to variable cost divided by the level of output
Long-run average cost curve
shows the lowest cost at which a firm is able to produce a given level of output in the long run
Economies of scale
The long-run average cost curve falls as output expands due to this.
Minimum efficient scale
the level of output at which all economies of scale have been exhausted
Constant returns to scale
After economies of scale have been exhausted, firms experience this, where their long-run average cost curve is flat
Diseconomies of scale
At high levels of output, the long-run average cost curve turns up as the firm experiences this.
Perfectly competitive market
this must have many buyers and sellers, firms must be producing identical products, and there must be no barriers to entry of new firms.
Firms in perfectly competitive markets are these, and see their sales drop to zero if they attempt to charge more than the market price.
the difference between total revenue (TR) and total cost (TC).
Average Revenue (AR)
total revenue divided by the quantity of the product being sold.
Marginal Revenue (MR)
the change in total revenue from selling one more unit
a cost that has already been paid and that cannot be recovered.
the minimum point on the firm's average variable cost curve
a firm's revenues minus all its costs, implicit and explicit
the situation in which a firm's total revenue is less than its total cost, including all implicit costs.
long-run competitive equilibrium
the situation in which the entry and exit of firms has resulted in the typical firm breaking even.
long-run supply curve
shows the relationship between market price and the quantity supplied.
Perfect competition results in this, which means that goods and services are produced at the lowest possible cost.
Perfect competition results in this, which means the goods and services are produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it.
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