Economics Midterm Review Flashcards

These flashcards summarize key concepts from the economics lecture notes, focusing on competitive markets, monopolies, and economic principles.

What do we call firms in an industry that cannot set their own prices?

Price takers.

When does a perfectly competitive firm maximize profit?

When marginal revenue equals marginal cost.

In a short run scenario, if AVC ≤ P ≤ ATC for a perfectly competitive firm, what is the firm's economic profit?

The firm produces output and earns zero economic profit.

What type of market structure is described as having a single producer with no substitutes?

Monopoly.

What is the price effect of Samantha selling her sixth ski-doo, given she must lower the price to sell it?

-$15,000.

In the context of monopolies, what does a patent restrict?

Entry into the market.

What is a dominant strategy?

A strategy that is optimal for a player, regardless of the strategies chosen by others.

How does a monopolistically competitive firm differ from a perfectly competitive firm in regards to demand curves?

It faces a downward-sloping demand curve due to product differentiation.

What happens to the economic profit of a firm if ATC decreases after a cost reduction?

The economic profit at the new profit-maximizing quantity may increase.

How is the value of the marginal product calculated?

Marginal product times the price per unit of output.

What is an example of a firm that would likely have a downward-sloping demand curve?

A firm in a monopolistically competitive market.