Econ 224 Study Guide
Econ 224 Study Guide ECON 224 006
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This 3 page Study Guide was uploaded by TiNesha Sampson on Monday September 28, 2015. The Study Guide belongs to ECON 224 006 at University of South Carolina taught by Slice in Summer 2015. Since its upload, it has received 71 views.
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Date Created: 09/28/15
Economics 224 Study Guide Chapter 46 Definitions Demand the ability and willingness to buy specific quantities of a good at alternative prices in a given time period ceteris paribus all other things equal Market demand total quantities of a good or service people are willing and able to buy at alternative prices in a given time period Utility Theory the more pleasure a product gives the higher price buyers are willing to pay Utility the pleasure or satisfaction obtained from a good or service Total utility the amount of satisfaction obtained from entire consumption of a product Law of Demand the higher marginal utility the more you are willing to pay Demand Curve quantities of a good a consumer is willing and able to buy at alternative prices in a given time period ceteris paribus Substitute goods demand for good increases when the price of a substitute for the good goes up Complementary goods the demand for a good decreases when the price of a complement to the good goes up Factors of Production resource inputs used to produce goods and services Productivity output per unit of input Efficiency maximum output of a good from the resources used in production Shortrun constraints the period in which the quantity and quality of at least one input cannot be changed Law of diminishing returns the MPP of a variable input declines as more of it is employed with a given quantity of other fixed inputs Fixed costs costs of production that do not change when the rate of output is altered Variable costs costs of production that change when the rate of output is altered Explicit cost A payment made for the use of a resourcemoney is exchanged Implicit cost the value of resources used even when no direct payment is mademoney is not exchanged Market Supply the total quantity of a good that sellers are willing and able to sell at alternative prices in a given time period ceteris paribus Market mechanism the use of market prices and sales to signal desired outputs Formulas change in total utility Marginal Utility change in quantity change in quantity demanded Price elasticity E change in price Total revenue price x quantity sold change in total output Marginal physical product MPP change in input quantity ProfitTota RevenueTotal Costs Or Profit average profit profit per unit x quantity sold Profit per unit Price ATC Marginal Resource Cost MRC w change in output total fixed cost Average fixed cost AFC total output total variable cost Average variable cost AVC total output Average total cost ATC AFC AVC change in total cost Marginal cost MC change in output Economic cost explicit costs implicit cost Other Concepts Determinants of Demand 0 Tastes desire for this and other goods 0 Income of the consumer o Expectations for income prices and tastes o Other goods their availability and price 0 The number of consumers in the market Determinants of Price Elasticity 0 Whether the good is a necessity or luxury 0 The availability of substitutes o The price relative to income A Cost Summary 0 MC gt ATC ATC is increasing 0 MC lt ATC ATC is decreasing o MCATCATC at minimum Supply Horizons o Shortrun concerns the production decision 0 Longrun concerns the investment decision 5 common types of market structure 0 Perfect Competition 0 A firm without market power a price taker o Monopolistic Competition 0 Many firms supply essentially the same product but each enjoys significant brand loyalty o Oligopoly o A few large firms supply all or most of a particular product 0 Duopoly 0 Only two firms supply a product 0 Monopoly o A firm that produces the entire market supply of a particular good or service Price gt MC increase output rate Price MC Maintain output rate profits maximized Price lt MC Decrease output rate Important influences on marginal costs and supply behavior 0 The price of factor inputs 0 Technology 0 Expectations Determinants of market supply of a competitive industry 0 The price of factor inputs 0 Technology 0 Expectations 0 The number of firms in the industry Characteristics of a competitive market 0 Many firms 0 Identical products 0 Low entry barriers o MCprice 0 Zero economic profit 0 Perfect information
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