Micro Economics Final Test

  1. Economic Profit
    Total revenue minus opportunity costs/total costs (explicit and implicit costs) is called
  2. Accounting Profit
    • Economic Firm: Implicit costs + Economic Profit
    • Accounting Firm: Total revenue-explicit costs
  3. Total Costs
    Implicit and Explicit Costs
  4. The difference between accounting profit and economic profit relates to
    the manner in which costs are defined.
  5. A production function is a relationship between...
    inputs and quantity of output.
  6. production function
    quantity of inputs and quantity of output
  7. Economies of Scale
    When ATC falls as the quantity of output increases
  8. Diminishing Marginal Product
    When marginal product of an input declines as the quantity of an input increases.
  9. Diseconomies of Scale
    When long-run ATC rises as the quantity of output increases.
  10. If a firm produces nothing, costs that would be zero...
    Variable costs
  11. Average?
    • Average: Cost of a typical unit
    • Marginal: Cost of an additional unit
  12. When firms are said to be price takers, it implies that if a firm raises its price...
    Buyers will go elsewhere
  13. Best reflection for price-taking firm:
    If the firm would change their price to more than the going price, it would sell none of its goods.
  14. In a perfectly competitive market, change in output, but no change in price means...
    Total Revenue
  15. When a profit-maximizing firm in a competitive market has zero economic profit, accounting profit...
    is positive
  16. MR=MC
  17. A monopoly's marginal cost will be...
    Less than the price per unit of its product
Card Set
Micro Economics Final Test
Final Exam Review