Studied by 4 people
Demand curve
shows relationship between price and quantity demanded of a good during a certain period of time
Law of diminishing marginal utility
satisfaction decreases as additional units of a good is consumed within a given period
Law of demand
as the price of a good increases, the demand decreases
Supply curve
shows relationship between price and quantity supplied by a perfectly competitive firm during a certain period of time
Law of supply
as the price increases, the quantity of a good also increases
Marginal cost
additional cost of producing another unit
Market supply curve
shows total quantities of a good that suppliers are willing able able to provide at various prices during a period of time
Change in quantity supplied
change in price → sellers adjust quantity
Change in supply
change in overall supply
Long-run average cost (LRAC)
cost function that represents the average cost per unit for producing a good
Use of equipment
robots, assembly lines, etc
Diseconomies of scale
exist over range of output when LRAC increases
Increasing returns (to scale)
when output increases proportionately more than increases in all inputs
Decreasing cost firm
firm facing increasing returns to scale
Decreasing returns (to scale)
when output increases proportionately less than increases in all inputs
Increasing cost firm
firm facing decreasing returns to scale
Constant returns (to scale)
increase in output is equal to increase in input
Diminishing (marginal) returns
additional unit of input increases total input less than the previous unit of input → holds all other inputs constant
Increasing cost firm
faces decreasing returns to scale
Decreasing cost firm
faces increasing returns to scale
Note 
Flashcard (55)