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EC120 - Intro To Microeconomics Detailed Questions And Expert Answers 2024 $11.99   Add to cart

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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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  • August 20, 2024
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  • EC120
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EC120 - Intro To Microeconomics Detailed
Questions 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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