COMM 171 Econ Flaschards NEED TO KNOW

Economy

System for coordinating a society’s productive activities

Command Economy

Market Economy

Invisible Hand

Competitive Market

A market with many buyers and many sellers, where no single actor can move the price

Quantity Demanded Effects

Substitution effect, income effect

Consumer surplus

willingness to pay minus what you actually paid

Producer Surplus

Price received minus the seller’s cost

Price Ceilings Effects

Price Floors Effects

Production Function

Relationship between the quantity fo inputs and quantity of outputs

Total Product

Quantity of output produced with a given quantity of the variable input, holding fixed CONSTANT

Marginal Product

Change in total output, when you add one more unit of a variable. MP = change in Q / change in input

Total Product Curve and Marginal Product Curve

Total Cost, VC, FC Graph

Marginal Cost

MC = change in TC / Change in Q

Average Total Cost

Average Variable Cost

Average Fixed Cost

ATC AFC AVC Graph

Perfect Competition

Market with many buyers and sellers of identical product. PRICE TAKERS, free entry and exit.

Perfect Competition Graph

Marginal Revenue

Change in tr/ change in q

When do you produce until

P = MC (MR = MC)

When do you shut down?

P lower than AVC

Profit?

ATC is lower than PRICE

Long Run

economic profit ends at 0

Long run supply curve

Flatish, a jump in demand moves quantity a lot and price only a little

Short Run Supply curve

STEEP, jump in demand moves price A LOT

Negativve, Positive, Production, Comsumption what happens MSC MPC MSB MPB and what’s the solution?

Coase Theorem

Property rights are assigned and cost of bargaining is low, private parties reach efficient quantity on their own

Four ways a government can price a spillover

Four typoes of Good table memorize

Four ways public goods get paid for

Adding curves for MSB and MC **