What is determined by the equation total revenue minus total cost?
Profit
100
What are the two characteristics of a Perfectly Competitive Market?
1) Many buyers and many sellers
2) Goods are identical
100
When a monopolist switches from charging a single price to perfect price discrimination, it reduces
Consumer Surplus
200
Give three examples of fixed costs
Insurance, Property taxes, annual salaries, rent, etc.
200
What is the equation for Average Revenue?
TR/Q
200
If a monopoly's fixed costs increase, its price will ______ and its profit will ________.
stay the same; decrease
300
Why is economic profit always smaller than accounting profit?
Economists take into account implicit costs while Accountants do not.
300
When should a firm shut down?
When P<AVC
300
What two laws can make a Government Created Monopoly?
Patent and Copyright
400
The relationship between the quantity of input used and the quantity of output is called what?
Production Function
400
At what point is profit maximized?
MR=MC
400
What does the output effect state?
The more output that is sold, tends to increase total revenue.
500
If Boeing produces 9 jets per month, its long-run total cost is 9 million dollars per month. If it produces 10 jets per month, its long-run total cost is 9.5 million dollars per month. Does Boeing exhibit economies or diseconomies of scale?
Diseconomies of scale
500
Is renting equipment a sunk cost?
Yes, but only if you rent.
500
What does the price effect state?
The price falls from the increased quantity, which tends to decrease total revenue.