Studied by 2 peopleProducer surplus
________: amount by which price exceeds the seller's reservation price.
Long run
________: period of time of sufficient length that all the firm's factors of production are variable.
significant influence
Perfectly competitive market: market in which no individual supplier has ________ on the market price of the product.
Short run
________: period of time sufficiently short that at least some of the firm's factors of production are fixed.
Profit
________: total revenue a firm receives from the sale of its product minus all costs- explicit and implicit- incurred in producing it.
Price taker
________: firm that has no influence over the price at which it sells its product.
Profit
________= Total revenue- Variable cost- Fixed cost.
Profit-maximizing firm
firm whose primary goal is to maximize the difference between its total revenues and total costs
Perfectly competitive market
market in which no individual supplier has significant influence on the market price of the product
Price taker
firm that has no influence over the price at which it sells its product
Imperfectly competitive firm
firm that has at least some control over the market price of its product
Factor of production
input used in the production of a good/service
Short run
period of time sufficiently short that at least some of the firm's factors of production are fixed
Long run
period of time of sufficient length that all the firm's factors of production are variable
Law of diminishing returns
property of the relationship between the amount of a good/service produced and the amount of a variable factor required to produce it; the law says that when some factors of production are fixed, increased production of the good eventually requires ever-larger in creases in the variable factor
Fixed factor of production
input whose quantity cannot be altered in the short run
Variable factor of production
input whose quantity can be altered in the short run
Fixed cost
sum of all payments made to the firm's fixed factors of production
Variable cost
sum of all payments made to the firm's variable factors of production
Total cost
sum of all payments made to the firm's fixed and variable factors of production
Marginal cost
as output changes from one level to another, the change in total cost divided by the corresponding change in output
Profit = Total revenue
Total cost
Average variable cost (AVC)
variable cost divided by total output
Average total cost (ATC)
total cost divided by total output
Profitable firm
firm whose total revenue exceeds its total cost
Producer surplus
amount by which price exceeds the seller's reservation price
Profit
Total revenue a firm receives from the sale of its product minus all costs explicit and implicit incurred in producing it
Profit-maximizing firm
Firm whose primary goal is to maximize the difference between its total revenues and total costs
Perfectly competitive market
Market in which no individual supplier has significant influence on the market price of the product
Price taker
Firm that has no influence over the price at which it sells it its product
Imperfectly competitive firm
Firm that has at least some control over the market price of its product
Factor of production
Input used in the production of a good/service
Short run
Period of time sufficiently short that at least some of the firm's factors of production are fixed
Long run
Period of time of sufficient length that all the firm's factors of production are variable
Law of diminishing returns
Property of the relationship between the amount of a good/service produced and the amount of a variable factor required to produce it; the law says that when some factors of production are fixed, increased production of the good eventually requires ever-larger in creases in the variable factor
Fixed factor of production
Input whose quantity cannot be altered in the short run
Variable factor of production
Input whose quantity can be altered in the short run
Fixed cost
Sum of all payments made to the firm's fixed factors of production
Variable cost
Sum of all payments made to the firm's variable factors of production
Total cost
Sum of all payments made to the firm's fixed and variable factors of production
Marginal cost
As output changes from one level to another, the change in total cost divided by the corresponding change in output
Average variable cost (AVC)
Variable cost divided by total output
Average total cost (ATC)
Total cost divided by total output
Profitable firm
Firm whose total revenue exceeds its total cost
Producer surplus
Amount by which price exceeds the seller's reservation price
Note 
Flashcard (46)