Cross Price
define cross price elasticity
Indicates how responsive the quantity demanded of a good is to changes in price of another good
define fixed costs
constant cost
define economies of scale
a proportionate saving in costs gained by an increased level of production
define barriers to entry
high start up costs
define monopoly
single business owns the whole market
define substitute goods
a good that can be used in place of another
define variable costs
Change as more output is produced
define perfect competition
all firms sell identical product
If the average of your total cost is less than the price of the product, then you are
making babki
define price discrimination
Want to charge customers the most they are willing to pay - one price for one person and another price for different person
define complimentary good
a good whose appeal increases with the popularity of its complement
example of fixed cost besides rent
vary
compare and contrast economic profit vs accounting profit
vary
If the average of your total cost is more than the price of the product, then you are
losing babki
what is the difference between perfect competition and monopoly
no profit vs making money
if cross price elasticity is 2 this means that
they are substitutes
3 examples of variable cost in bakery
vary
what does economic profit tell the business owner?
whether he should stay open or close
If the average of your total cost is equal to the price of the product, then you are
breaking even
define natural monopoly
Industries where competition isn’t possible due to extremely high fixed costs
give an example of THREE substitutes
answers vary
what is marginal cost and why is it important?
cost of one more unit - decide if you are profitable
define long run
all costs vary
when do you decide to close a business? losing money is not the right answer
when you can not make any money to cover the fixed cost
list 3 features of oligopoly
Small number of firms selling a homogeneous or differentiated product - High barriers to entry and high market power - Mutualistic interdependence