ECO 201 Dr. Elliott Exam 3
Questions and Answers 100% Pass
Profit - ✔✔Regardless of market type, firms are all about
Profit - ✔✔Revenue-Costs
Revenue - ✔✔-Amount of money the firm brings in
-Price times quantity sold
Cost - ✔✔Amount the firm pays to produce the good
Maximizing profits - ✔✔Firms are all about
Accounting Cost - ✔✔-Visible costs
-Costs of land, labor, and capital
Economic Cost - ✔✔-Visible costs
-Opportunity cost of capital and time
Economic costs - ✔✔Accounting costs are smaller than
Economic profit - ✔✔Accounting profit is greater than
Positive accounting profit - ✔✔If a firm is making 0 economic profit, it is making
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, Short run - ✔✔Not a specific period of time
Short run - ✔✔The time period in which at least one input is fixed (usually capital) and
all others (usually just labor) are variable
Total Cost - ✔✔Fixed cost + Variable cost
Average Total Cost - ✔✔Average fixed cost + Average variable cost
Marginal cost - ✔✔The change in cost given a change in output
The average falls - ✔✔When the marginal is less than the average,
The average rises - ✔✔When the marginal is greater than the average,
The average does not change - ✔✔When the marginal and the average are equal,
Long Run - ✔✔The time period in which all inputs are variable
Long run - ✔✔-Can change the amounts of labor and capital
-No fixed costs, all costs are variable
Perfect Competition Assumptions - ✔✔1. Many buyers
2. Many sellers
3. Product homogeneity
4. Free entry and exit (perfect resource mobility)
5. Perfect information
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 2
Questions and Answers 100% Pass
Profit - ✔✔Regardless of market type, firms are all about
Profit - ✔✔Revenue-Costs
Revenue - ✔✔-Amount of money the firm brings in
-Price times quantity sold
Cost - ✔✔Amount the firm pays to produce the good
Maximizing profits - ✔✔Firms are all about
Accounting Cost - ✔✔-Visible costs
-Costs of land, labor, and capital
Economic Cost - ✔✔-Visible costs
-Opportunity cost of capital and time
Economic costs - ✔✔Accounting costs are smaller than
Economic profit - ✔✔Accounting profit is greater than
Positive accounting profit - ✔✔If a firm is making 0 economic profit, it is making
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 1
, Short run - ✔✔Not a specific period of time
Short run - ✔✔The time period in which at least one input is fixed (usually capital) and
all others (usually just labor) are variable
Total Cost - ✔✔Fixed cost + Variable cost
Average Total Cost - ✔✔Average fixed cost + Average variable cost
Marginal cost - ✔✔The change in cost given a change in output
The average falls - ✔✔When the marginal is less than the average,
The average rises - ✔✔When the marginal is greater than the average,
The average does not change - ✔✔When the marginal and the average are equal,
Long Run - ✔✔The time period in which all inputs are variable
Long run - ✔✔-Can change the amounts of labor and capital
-No fixed costs, all costs are variable
Perfect Competition Assumptions - ✔✔1. Many buyers
2. Many sellers
3. Product homogeneity
4. Free entry and exit (perfect resource mobility)
5. Perfect information
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 2
