Like this study set? Create a free account to save it.

Sign up for an account

Already have a Quizlet account? .

Create an account

A production function:

Is a technological relationship between factors of production and output

The change in total output that results from one additional unit of input is the:

Marginal physical product

The law of diminishing returns indicates that the marginal physical product of a factor declines as more:

Of the factor is used, holding other inputs constant

The planning period over which at least one resource input is fixed in quantity is the:

Short run

The long run refers to:

A period of time long enough for all inputs to be varied

Which of the following is equivalent to total cost?

Fixed costs plus variable costs

In the short run, a manufacturer should produce the next unit of output as long as:

Price is greater than marginal cost

Explicit costs:

Are the sum of actual monetary payments made for resources used to produce a good

Implicit costs:

Are the total value of resources used to produce a good but for which no direct payment is made

Economic profit is equal to total revenue minus:

Both implicit costs and explicit costs

Market structure is determined by:

The number and relative size of firms in an industry

Competitive firms cannot individually affect market price because:

Their individual production is insignificant relative to the production of the industry

Which list has market structures in the correct order from the most to the least market power?

Monopoly, oligopoly, monopolistic competition, perfect competition

Which of the following is characteristic of perfectly competitive markets?

A large number of firms

Which of the following is characteristic of a perfectly competitive market?

There are low barriers to entry

In a perfectly competitive market, an individual catfish farmer faces a firm demand curve that:

Is flat or horizontal

Which of the following is involved in a competitive firm's short-run production decision?

Choosing a rate of output using the existing plant and equipment

Marginal cost is:

The increase in total costs because of a one-unit increase in output

A competitive firm's profits are maximized where:

Price equals marginal cost

In a perfectly competitive market with positive economic profits:

Firms will enter until economic profits are zero

Which of the following firms is likely to have the greatest market power?

The sole producer of the latest computer microchip technology

The demand curve for an individual monopolist:

Is the same as the market demand curve

Which of the following might be used to protect a monopoly from competition?

A patent

Monopolists are price:

Makers, but perfectly competitive firms are price takers

The demand curve for a monopolist:

Lies above the marginal revenue curve at every point but the first

The change in total revenue that results from a one-unit increase in quantity sold is:

Marginal revenue

In order to sell one additional unit of output, a profit-maximizing monopolist must:

Reduce the price of all units sold

For a monopolist, after the first unit of output, marginal revenue is always:

Less than price

Which of the following rules is always satisfied when a monopoly maximizes profits?

Marginal revenue equals marginal cost

A monopolist sets price at a point on the _______ curve, corresponding to the rate of output determined by the intersection of _______.

Demand; marginal revenue and marginal cost

The study of aggregate economic behavior is referred to as:


Alternating periods of growth and contraction in real GDP define:

The business cycle

Which of the following is not a basic measure of macroeconomic performance?

Public goods

Which of the following is true during the expansionary phase of the business cycle?

Real GDP increases

The total value of goods and services produced within a nation's borders, measured in constant prices refers to:

Real GDP

Nominal GDP is defined as the:

Value of output in current dollars

All persons over age 16 who are either working for pay or actively seeking paid employment refers to:

The labor force

The unemployment rate is calculated by dividing:

The number of unemployed by the labor force and multiplying by 100

Inflation is defined as:

An increase in the average level of prices

The Consumer Price Index is:

A measure of changes in the average price of consumer goods and services

the ability and willingness to sell different quantities of a product at different prices in a given time period ceteris paribus


change in total output divided by change in input quantity


costs of production that do not change when the rate of output is changed

fixed costs

costs of production that can be altered when the rate of output changes

variable costs

total cost divided by total output

average total cost

the dollar cost of all resources used in production

economic cost

include only explicit costs

accounting cost

the difference between total revenue and total cost

economic profit

the number and relative size of firms in an industry

market structure

ability to change the market price of a good or service

market power

a firm that has no market piwer and is not able to affect the price of products; is a price taker

competitive firm

market structure from least to most powerful:

perfect competition, monopolistic competition, oligopoly, duopoly, monopoly

in between perfect competition and monopoly

imperfect competition

existence of only two suppliers of a product


a few suppliers of a product


represents many suppliers of a similar product in a market

monopolistic competition

short run profits are maximized when

price is equal to marginal cost

short run supply curve for competitive firms is

marginal cost

the sum of all quantities of a good or service that each firm is willing and able to supply at different prices ceteris paribus

market supply

characteristics of a competitive market

many firms, identical product, MC=P, low entry barriers, zero economic profit, buyers and sellers know about market opportunities

single producer that produces entire quantity supplied to market, represents entire industry,


a grant given to a firm by the government; gives the firm exclusive ownership of an innovation


market demand and monopoly demand:

are the same

monopolies maximize profit when:


barriers to entry include:

patents, legal harassment, exclusiv licensing, bundled products, government franchises

near monopolies are:

duopoly, oligopoly, and monopolistic competition

3 ?s with monopolies

for whom- not everyone, only some can afford; what- less output; how- breeding, harvesting, distributing (restricts technology development)

the three basic measures of macro performance

output growth (GRP), unemployment, inflation

market value in current prices of all goods and services produced in a given period of time; not adjusted for inflation

nominal GDP

market value in real prices of all goods and services produced in a given period of time; adjusted for inflation

real GDP

when a member of the labor force is not able to find a job


due to factors such as weather, variations in tourism, etc causing loss of jobs

seasonal unemployment

results when people ar moving from one job to another

frictional unemployment

due to a mismatch between workers skills and job requirements

structural unemployment

when demand for goods and services decrease so production levels and demand for labor decreases

cyclical unemployment

between 4 and 6 percent unemployment

full unemployment

a decrease in averag level of prices of goods and services


a comparison of the changes in price of one good relative to the prices of other goods

relative price

the money you get in a given period

nominal income

the nominal income adjusted for inflation

real income

price changes after nominal income

income effects

people with some wealth affected differently by redistribution relative to people who do not have any wealth

wealth effects

measures the changes in average price of consumer goods and services

consumer price index

the percentage increase in average price level from one year to the next

inflation rate

a numeric goal for price stability established in full employment and balanced growth act; helps to keep inflation rate below 3 percent

the policy goal

Please allow access to your computer’s microphone to use Voice Recording.

Having trouble? Click here for help.

We can’t access your microphone!

Click the icon above to update your browser permissions and try again


Reload the page to try again!


Press Cmd-0 to reset your zoom

Press Ctrl-0 to reset your zoom

It looks like your browser might be zoomed in or out. Your browser needs to be zoomed to a normal size to record audio.

Please upgrade Flash or install Chrome
to use Voice Recording.

For more help, see our troubleshooting page.

Your microphone is muted

For help fixing this issue, see this FAQ.

Star this term

You can study starred terms together

Voice Recording