Economies of scale
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the cost per unit falls as output increases, as such, larger firms face lower
costs and undercut smaller competitors
Excess Capacity
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occurs when a firm produces less than the level needed to minimize ATC.
Means that the capital the firm owns isn't being fully utilized
Ways Firms work to Differentiate Their Products
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1. Style or Type ex. Hot Topic vs. Gap 2. Location ex. Lillis Café 3. Quality ex.
North Face 4. Environmental/Social Consciousness ex. Fair Trade Coffee
Economics of scale
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occur when costs decline as output expands in the long run
demand curve
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a graph that shows the quantities of a particular good or service that
consumers will demand at various prices
absolute advantage
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the ability to produce more of a good or service than others can with a
given amount of resources
market failures
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situations in which the assumption of efficient, competitive markets fails to
hold
AVC =
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VC/Q
equilibrium
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the situation in a market when the quantity supplied equals the quantity
demanded; graphically, this convergence happens where the demand
curve intersects the supply curve
, Mutual Interdependence
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"My profits depend on your price, your profit depend on my price"
Positive Externalities on the graph
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D internal moves right to D social, from Q current to Q efficient
surplus (excess supply)
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a situation in which the quantity of a good that is supplied is higher than the
quantity demanded
External Costs
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costs of a market activity paid by people who are not participants
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the cost per unit falls as output increases, as such, larger firms face lower
costs and undercut smaller competitors
Excess Capacity
,Give this one a try later!
occurs when a firm produces less than the level needed to minimize ATC.
Means that the capital the firm owns isn't being fully utilized
Ways Firms work to Differentiate Their Products
Give this one a try later!
1. Style or Type ex. Hot Topic vs. Gap 2. Location ex. Lillis Café 3. Quality ex.
North Face 4. Environmental/Social Consciousness ex. Fair Trade Coffee
Economics of scale
Give this one a try later!
occur when costs decline as output expands in the long run
demand curve
Give this one a try later!
a graph that shows the quantities of a particular good or service that
consumers will demand at various prices
absolute advantage
,Give this one a try later!
the ability to produce more of a good or service than others can with a
given amount of resources
market failures
Give this one a try later!
situations in which the assumption of efficient, competitive markets fails to
hold
AVC =
Give this one a try later!
VC/Q
equilibrium
Give this one a try later!
the situation in a market when the quantity supplied equals the quantity
demanded; graphically, this convergence happens where the demand
curve intersects the supply curve
, Mutual Interdependence
Give this one a try later!
"My profits depend on your price, your profit depend on my price"
Positive Externalities on the graph
Give this one a try later!
D internal moves right to D social, from Q current to Q efficient
surplus (excess supply)
Give this one a try later!
a situation in which the quantity of a good that is supplied is higher than the
quantity demanded
External Costs
Give this one a try later!
costs of a market activity paid by people who are not participants
