Flashcards in 7.4-1, 8.2-1, 8.1-1, 8.3-2, 8.3-3 Deck (53)
What are the fixed costs in the long run?
Their are no fixed costs or inputs in the long run. All inputs are variables
when a firm uses more labor (Workers) relative to capital (tools)
uses more capital (tools) relative to labor (workers)
Scale or Size of operation is a choice during the long or short run
Long Run. You cannot change the size of the operation during the short run, only add workers
Is the firm able to downsize in the long run?
Yes, the firm can downsize or grow in the long run. All inputs are variables
A period of time in which there are no fixed inputs and no fixed costs. all inputs can be varied
A firm can choose either a capital-intensive technology or a labor-intensive technology in the _____ _____.
In ____ _____, a firm can only add or eliminate labor
Choice of Scale
a firm can choose to build new factories, open new offices, or close existing operations during the long run
Cost minimizing technique
the combination of labor and capital to produce output at the lowest cost
T/F: A wheat farm that uses migrant workers to plant and harvest the crops is capital-intensive?
False. This farm is labor-intensive
change in quantity demanded
a change in a good's own price leads to a change in quantity demanded, a move along a given demand curve
a market where the many buyers and sellers have little market power- each buyer's or seller's effect on market price is negligible
the process of buyers and sellers exchanging goods and services
market demand curve
the horizontal summation of individual demand curves
market supply curve
a graphical representation of the amount of goods and services that suppliers are willing and able to supply at various prices
individual demand curve
a graphical representation that shows the inverse relationship between price and quantity demanded
individual demand schedule
a schedule that shows the relationship between price and quantity demanded
the price it charges for its product multiplied by the quantity of its products it sells ina given period.
the ability to influence the price of your product
A firm has market power if it can...
raise the price of its product without losing all of its customers to a competitor. or can lower its product without attracting the entire market
an industry is perfectly competitive if it's made up of a large number of small firms each selling an identical product
in a perfect competitive market a firm is going to have to price its product _________ the competition
Price their product right with the competition
No barriers to entry
the firm can enter and exit whenever it likes
The market price or going equilibrium price
In a perfect competition market a firm's demand curve will be ___________ at the market equilibrium price
horizontal. The firm could make and sell all of the product they wanted at the market equilibrium price
Any firms profit is:
the difference between total revenue and total cost
T/F: Firms that can set the product prices alone are called "price takers"
False - Firms with market power, such as monopolies, can set the price of a product are referred to as "price setters"
The competitive firm will not sell at a price lower than the market price because...
They can sell all they want at the market price