Colloqium No. 2 [MICROECONOMY]

Microeconomy (Perfect Competition, Imperfect Competition

Who is the PRODUCER?

It's a provider of goods or services.

Who is the BUYER?

It's a person who makes a purchase.

Who is a SALESPERSON?

It's someone that offers their goods.

What is PRODUCTION?

It's assumption of processing recources to produce different products and services.

What is PRODUCTION TECHNOLOGY?

It's a method that get together different recources with each other.

What is ECONOMIC EFFICIENCY?

Maximizing output of goods and services from the resources available.

What is PROFIT?

The financial gain made in a transaction.

What is TOTAL PRODUCT?

Total output produced by the firm (TP \= Q.)

What is MARIGINAL PRODUCT?

The increase in output that arises from an additional unit of input (MP \= change in TP / change in LI).

What is AVERAGE PRODUCT?

It's an output per unit of input (AVP = TP / L).

What is ACCOUNTING PROFIT?

Total revenue minus total explicit costs (AP \= TR - TEC).

What is ECONOMIC PROFIT?

It's total revenue minus total cost, including both explicit and implicit costs (EC \= TR - TC).

What is GROSS PROFIT?

It's a difference between revenue and cost of sales (GP = R - C).

What is NET PROFIT?

NP \= GP - Expenses; which is then used to calculate tax owed to HMRC.

What is PROFIT FOR OWNERS?

Difference between net profit and mandatory and voluntary reserve (PFO = NP - VR).

What is PRODUCTION THEORY?

It's an analysis of the producer's response to the market situation.

What is THE LAW OF DIMINISHING RETURNS?

Additional units of variable inputs provide less and less additional product in the short-run.

What is TOTAL COST?

It's the sum of fixed and variable costs.

What is TOTAL VARIABLE COST?

Costs that change directly with output.

What is AVERAGE COST?

It's the total cost divided by the quantity produced (AC = TC / Q).

What is MARIGINAL COST?

It's the change in the total cost due to the change in production by unit (MC = change in TC / change in Q).

What is TOTAL REVENUE?

It's the number of units sold multiplied by the average price per unit (TR \= P x Q).

What is AVERAGE REVENUE?

It's total revenue divided by the quantity sold (AVR = TR / Q)

What is MARGINAL REVENUE?

the change in total revenue- the extra revenue- resulting from selling one more unit of output (MR \= △TR / △Q \= P).

What is TOTAL PROFIT?

The difference between total revenue and total cost (TP = TR − TC).

What is AVERAGE PROFIT?

It's total profit divided by quantity demanded (AVPr = TP / Q)

What is IMPERFECT COMPETITION?

It's a market structure that fails to meet the conditions of perfect competition.

What is PERFECT COMPETITION?

It's a market structure in which a large number of firms all produce the same product.

What is MONOPOLY?

It's the complete control of a product or service.

What are the CHARACTERISTICS of monopoly?

Single seller, no close substitutes, high barriers to entry

What is the PRICE EFFECT?

It's when lower price reduces revenue.

For a competitive firm:

P = MR = MC

For a monopoly firm:

P > MR = MC

What is PRICE DISCRIMINATION?

It's selling the same good at different prices to different buyers.

What are the FAULTS OF MONOPOLY?

The disadvantages of monopolies include: price-fixing, low-quality products, lack of incentive for innovation, and cost-push inflation.

What is MONOPOLISTIC COMPETITION?

It's when many firms sell similar but not identical products.

What is OLIGOPOLY?

It's when very few businesses selling a product.

What is a DUOPOLY

It's an oligopoly with two firms.

What is the BERTRAND MODEL?

It's when companies compete on price.

What is the SWEEZY'S MODEL?

It's when we have a collapsed demand curve.

What is a SYNDICATE?

It's a business group.

What is a CONGLOMERATE?

Major corporation that has many small companies in an unrelated industry.

What is a HOLDING?

It's an organization that groups various economic entities.