Vocabulary
The 3 short term assumptions of perfect competition
What is many sellers?
What is sellers in the market sell identical Products?
What is individual sellers cannot determine the price?
Draw the Graph of AFC when AFC is 8 and quantity is 30. Also include what total fixed costs would be.
What is Reference 9.5 Graph 4? This shows the relationship that when quantity increases the amount per unit of fixed costs you are paying will decrease but never hit 0. Fixed costs is AFC * Q. 8*30 = 240
Marginal Revenue = ?
What is Market Price?
Profit is Maximized when
What is when MR=MC
The name of the coffee addicted character in the textbook.
What is Zeke?
The elasticity of an individual firm in a perfectly competitive market
Draw a graph of a firm. ATC is 6 and Price is 4. Quantity is 21. What is total economic profit?
What is Reference 10.7 graph 1? Since we are spending more than we are earning we know this is negative.
4-6= -2 profit per unit
-2 * 21 = -42$
Solve for Price when you have Quantity and Total revenue. Set up the equations using Q, TR and P
What is TR/q = P
The Economic Profit of the 8th and 9th unit is 45. The Firm will
What is the firm is indifferent?
Individuals or Firms have more political power
What is a few powerful firms?
Normal Profit
What is when economic profit = 0?
Draw a Graph of a firm. Price is 10. ATC is 6. Quantity is 30. Also include total profit and shade in the area that represents total profit.
What is If practicing at home, reference 10.5 graph 1? Total profit will be Price - ATC = Profit for unit. Profit per unit * quantity will give you total profit. The height of the profit rectangle is ATC to Price and the Length is From Price to Quantity.
Solve for Marginal Cost when you know Marginal Revenue and Marginal Profit. Solve using the Variables MR, MC, MP.
What is MC = MR - MP
Firms can exit in __ and shut down in __
What is long run, short run?
What is Uncle Gordon?
Constant cost market + example
What is a perfectly competitive market where input prices do not change when new firms enter?
What is the toothpick market?
Draw a graph of a firm. Price and ATC are both 60 and Quantity is 30000. Include Total Economic profit and Total Accounting Profit. Implicit Costs are 600000.
What is Reference 10.6 Graph 1? To calculate Accounting Profit we would add back the implicit costs since they have already been subtracted to find ATC.
60*30000 = 18000001800000 + 600000
Accounting Profit is 2400000
When firms are making positive economic profit in the short run What will happen to Market Price, Market Supply and Economic Profit?
What is since firms are making profit more will enter and therefore market supply will increase?
What is since Supply is decreasing market Price will decrease until it equals ATC?
What is since P=ATC economic profit is 0?
TR is 10,VC is 8, and FC = 20. Find the firms decision and the profit at the best decision.
What is when TR>VC produce?
Since 10>8 we produce
Profit = TR - Variable Costs - Fixed Costs
If we shut down then 0 - 0 - 20 will give us profit of -20
If we produce then 10 - 8 - 20 = -18 which is bigger than -20
Graphs or Tables have fractional units
What is Graphs? Refer to chapter 10.4, this chapter discusses how traditional economists believe that fractional units are possible but typically depicted on the graphs.
Increasing Cost Market + example
What is a competitive market where input prices increase as new firms enter?
What is the U.S. Home building market?
Solve the table on page 244 of the textbook. It is question 10 on 10.4 questions.
What is Reference 10.4 answer key on D2l?
https://ung.view.usg.edu/d2l/le/content/3215460/viewContent/65659217/View?ou=3215460
When firms are making negative economic profit in the short run What will happen to Market Price, Market Supply and Economic Profit?
What is since firms are losing many will choose to leave the market and so Market Supply will decrease?
What is Market Price will decrease until it equals ATC?
What is since P=ATC economic profit is 0?
Pushup Competition
What is this is just a fun one?
What is the crop that Professor Potter's uncle was growing?
What is soybeans?