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EC120 - Intro To Microeconomics Detailed Questions And Expert Answers 2024
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EC120 - Intro To Microeconomics Detailed Questions And Expert Answers 2024
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EC120 - Intro To Microeconomics DetailedQuestions And Expert Answers 2024
Decreasing returns to scale or diseconomies of scale
cheaper to be smaller
ATC increases at a faster rate than quantity
increasing returns to scale or economies of scale
spending less to produce more
ATC decreases while quantity increases
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constant returns to scale
doubling inputs exactly doubles outputs
average variable cost (AVC)
intersection with MC at minimum
U shaped
gets closer to ATC as Q increases, but doesn't intersect
rising marginal cost
starts to increase as output Q increases
diminishing marginal product due to decreased productivity and fixed factory size
average total cost (ATC)
U shaped:
first AFC pulls it down
then increasing AVC pulls it up
efficient scale
minimum point of ATC
socially efficient production level for perfectly competitive firm
average total cost (ATC)
TC/Q
average variable cost (ATC)
VC/Q
, average fixed cost (ATC)
FC/Q
marginal cost (MC)
change in TC/change in Q
production function
relationship between quantity of output and quantity of input (usually labour)
total cost curve
relationship between total cost and quantity of output
marginal product
change in Q/change in labour (input)
diminishing marginal product
less productive workers
less available space - equipment and factory space
each additional unit is more costly to product (increasing marginal cost)
economic profit
TR - explicit and opportunity costs
accounting profit
TR - explicit costs
competitive market
similar goods offered
negligible impact on price (price takers)
firms can easily enter or exit the market
revenue in a competitive firm
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