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Economics 201 Exam Study Guide| Questions with Answers 100% Verified Correct| Latest Update
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Economics 201 Exam Study Guide| Questions with Answers 100% Verified Correct| Latest Update
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Economics 201 Exam Study Guide| Questionswith Answers 100% Verified Correct| Latest
Update
Economic Cost - ✔✔The payment that must be made to obtain & retain the services of a
source. (give up one thing to get something else)
explicit costs - ✔✔- monetary payments
- accounting costs
implicit costs - ✔✔- opportunity cost
- value of the next best use
- self-owned resources
- includes normal profit ---- will make $ back
Short Run - ✔✔amt. of time to add fixed income
- some variable inputs: labor, paper printed on, etc.
- fixed plant
Long Run - ✔✔no fixed amounts
- all inputs are variable: copiers, salaries, buildings
- variable plant
- firms enter and exit
Total Product - ✔✔total output
,Marginal Product - ✔✔how much extra you make per unit
MP= change in TP/ change in labor input
Average Product - ✔✔AP = TP/units of Labor
Fixed Cost (TFC) - ✔✔costs that do not vary with output
- rent, electric, phone, internet
Variable Cost (TVC) - ✔✔costs that vary with output
- inventory, electric, wages
Total Costs (TC) - ✔✔TC = TFC + TVC
Average Cost - ✔✔Fixed:
- AFC = TFC / Q
Variable:
- AVC = TVC / Q
Total:
- ATC = TC / Q
Marginal Costs - ✔✔MC = change in TC / change in Q
Economies of Scale - ✔✔- labor specialization
- managerial specialization
, - efficient capital
- other factors
Diseconomies of Scale - ✔✔- control & coordination problems
- communication problems
- worker alienation
- shirking (no incentive to do whats needed)
Pure Competition - ✔✔-very large # of sellers
- standardized product
- "price takers"
- easy entry and exit
- perfectly elastic demand
- firm produces as much or as little as they want at the price they want
- demand graphs as horizontal line
Pure Monopoly - ✔✔- single sellers
- no close substitutions
- price makers
- blocked entry
- nonprice competition
Monopolistic Competition - ✔✔- relatively large # of sellers
- differentiated products
- easy entry & exit
- advertising is key
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