Microeconomics Final
absolute advantage - Answer-the ability to produce a good using fewer inputs than another producer
average fixed cost (AFC) - Answer-Total fixed cost divided by the number of units of output; a per-unit
measure of fixed costs. AFC = FC/Q
average total cost (ATC) - Answer-Total cost divided by the number of units of output ATC = TC/Q or ATC
= AFC + AVC
average variable cost (AVC) - Answer-variable cost divided by the number of units of output AVC = VC/Q
budget constraint - Answer-the limits imposed on household choices by income, wealth, and product
prices.
capital - Answer-goods used to produce other goods
cartel - Answer-a group of firms that gets together and makes joint price and output decisions to
maximize joint profits
ceteris paribus - Answer-a devise used to analyze the relationship between two variable while the values
of other variables are held unchanged.
clayton act - Answer-act outlawed specific monopolistic behaviors such as tying contracts
, command economy - Answer-An economy in which a central government either directly or indirectly
sets output targets, incomes, and prices
comparative advantage - Answer-the ability to produce a good at a lower opportunity cost than another
producer
complements - Answer-two goods for which an increase in the price of one leads to a decrease in the
demand for the other and vice versa
consumer goods - Answer-goods produced for present consumption
consumer sovereignty - Answer-The idea that consumers ultimately dictate what will be produced (or
not produced) by choosing what to purchase (and what not to purchase).
consumer surplus - Answer-The difference between the maximum amount a person is willing to pay for
a good and its current market price.
cross price elasticity of demand - Answer-measures the responsiveness of the quantity demand of a
good to a change in the price of another good.
diseconomies of scale - Answer-The property whereby long-run average total cost rises as the quantity
of output increases (right-most upward sloping part of the long-run ATC)
demand curve - Answer-a graph that shows the amount of a product that would be bought at all
possible prices in the market
depreciation - Answer-the decline in an asset's economic value over time
absolute advantage - Answer-the ability to produce a good using fewer inputs than another producer
average fixed cost (AFC) - Answer-Total fixed cost divided by the number of units of output; a per-unit
measure of fixed costs. AFC = FC/Q
average total cost (ATC) - Answer-Total cost divided by the number of units of output ATC = TC/Q or ATC
= AFC + AVC
average variable cost (AVC) - Answer-variable cost divided by the number of units of output AVC = VC/Q
budget constraint - Answer-the limits imposed on household choices by income, wealth, and product
prices.
capital - Answer-goods used to produce other goods
cartel - Answer-a group of firms that gets together and makes joint price and output decisions to
maximize joint profits
ceteris paribus - Answer-a devise used to analyze the relationship between two variable while the values
of other variables are held unchanged.
clayton act - Answer-act outlawed specific monopolistic behaviors such as tying contracts
, command economy - Answer-An economy in which a central government either directly or indirectly
sets output targets, incomes, and prices
comparative advantage - Answer-the ability to produce a good at a lower opportunity cost than another
producer
complements - Answer-two goods for which an increase in the price of one leads to a decrease in the
demand for the other and vice versa
consumer goods - Answer-goods produced for present consumption
consumer sovereignty - Answer-The idea that consumers ultimately dictate what will be produced (or
not produced) by choosing what to purchase (and what not to purchase).
consumer surplus - Answer-The difference between the maximum amount a person is willing to pay for
a good and its current market price.
cross price elasticity of demand - Answer-measures the responsiveness of the quantity demand of a
good to a change in the price of another good.
diseconomies of scale - Answer-The property whereby long-run average total cost rises as the quantity
of output increases (right-most upward sloping part of the long-run ATC)
demand curve - Answer-a graph that shows the amount of a product that would be bought at all
possible prices in the market
depreciation - Answer-the decline in an asset's economic value over time
