ECON MIDTERM
Terms
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- UTILITY
- BENEFIT OR SATISFACTION THAT A PERSON GETS FROM THE CONSUMPTION OF A GOOD OR SERVICE
- FIRM
- AN ECONOMIC UNIT THAT HIRES FACTORS OF PRODUCTION AND ORGANIZES THOSE FACTORS TO PRODUCE AND SELL GOODS AND SERVICES
- NORMAL PROFIT
- THE EXPECTED RETURN FOR SUPPLYING ENTREPRENEURIAL ABILITY
- ECONOMIC PROFIT
- A FIRMS' TOTAL REVENUE MINUS ITS OPPURTUNITY COST
- PERFECT COMPETITION
- A MARKET IN WHICH THERE ARE MANY FIRMS EACH SELLING AN IDENTICAL PRODUCT, ETC
- OLIGOPOLY
- A MARKET STRUCTURE IN WHICH A SMALL NUMBER OF FIRMS COMPETE
- MONOPOLY
- A MARKET STRUCTURE IN WHICH THERE IS ONE FIRM, WHICH PRODUCES A GOOD OR SERVICE THAT HAS NO CLOSE SUBSTITUTE, PREVENTION OF ENTRY OF NEW FIRMS.
- 4-FIRM CONCENTRATION RATIO
- A MEASURE OF MARKET POWER THAT IS CALCULATED AS THE PERCENTAGE OF THE VALUE OF SALES ACCOUNTED FOR BY THE 4 LARGEST FIRMS IN AN INDUSTRY.
- HERFINDAHL-HIRSCHMAN INDEX
- A MEASURE OF MARKET POWER THAT IS CALCULATED AS THE SQUARE OF THE MARKET SHARE OF EACH FIRM (%) SUMMED OVER THE LARGEST 50 FIRMS OR LESS IN A MARKET.
- SHORT RUN (FIRM)
- PERIOD OF TIME IN WHICH QUATINTY OF 1+ INPUT IS FIXED AND QUANTITIES OF OTHER INPUTS CAN BE VARIED
- SHORT RUN: (INDUSTRY)
- PERIOD OF TIME IN WHICH EACH FIRM HAS A GIVEN PLANT SIZE AND THE NUMBER OF FIRMS IN THE INDUSTRY IS FIXED.
- LONG RUN
- PERIOD OF TIME IN WHICH THE QUANTITIES OF ALL RESOURCES CAN BE VARIED
- SUNK COST
- THE PAST COST OF BUYING A PLANT THAT HAS NO RESALE VALUE
- LAW OF DIMINISHING RETURNS
- AS A FIRM USES MORE OF A VARIABLE INPUT, WITH A GIVEN QUANTITY OF OTHER INPUTS (FIXED), THE MARGINAL PRODUCT OF THE VARIABLE INPUT EVENTUALLY DIMINISHES.