Basic Concepts
the study of scarcity and its implications for the use of resources, production of goods and services, growth of production and welfare over time
what is economics?
The increase in demand for one causes an increase in demand for the other.
what are complimentary goods?
The extra cost of producing one more unit of output.
what is marginal cost?
profit maximization output and price
what is MR=MC?
market is shared by a small number of producers or sellers
what is oligopoly?
Total revenue - (explicit + implicit costs)
what is economic profit?
The added satisfaction that a consumer gets from having one more unit of a good or service
what is marginal utility?
Average total cost - Average variable cost
what is average fixed cost?
price is the same as ________.
what is demand?
strategic interactions among firms
what is game theory?
what is command economy?
The market demand for a product is directly tied to the price of the product.
what is perfectly elastic?
A firm's ___________ is when price falls below the average variable costs.
what is the shut-down point?
firms are ____________, meaning they set their price at the market price
the best payoff in a situation based not only on their decisions but also on the decisions of other parties involved
what is nash equilibrium?
the ability of one entity to produce a good or service at a lower opportunity cost than another entity
what is comparative advantage?
The higher the price, the larger the quantity produced. The lower the price, the lower the quantity produced.
the unit cost of production remains constant as the scale of production increases
what is economies of scale?
When profit is zero, this is what firms want
what is normal profit?
profit maximizing output and price
what is the output where MR=MC and price up to demand curve?
The statement "to improve the lives of all citizens, the government should make fundamental healthcare available to everyone" is an example of
a good that experiences an increase in its demand due to a rise in consumers' income.
what is a normal good?
the difference between the revenue received from the sale of an output and the costs of all inputs used, as well as any opportunity costs
what is economic profit or loss?
When industry demand increases, the price __________ and the quantity ____________.
what is increases; increases?
many firms selling similar products but not identical
what is monopolistic competition?