Definitions hide and write on Marginal Analysis Word / Term Diminishing marginal utility Marginal utility Your definition Correct definition As additional units are consumed total utility increases at a decreasing rate. Consumers get less and less satisfaction. The extra satisfaction gained from consuming additional units Monopoly The only seller in the market Economic costs The actual costs and the opportunity costs of running a business Accounting Costs Fixed costs The actual costs of running a business Costs that do not change as output changes e.g. insurance. Economies of scale As more of one factor is used with a fixed amount of some other factor the output will rise but by less and less each time. As the size of the firm increases the average cost of production decreases Diseconomies of scale As the size of the firm increases the average cost of production increases. Diminishing returns Breakeven point Shutdown point The price at which revenue covers all economic costs The price at which revenue covers you variable costs. Word / Term Supernormal profit Normal profit Subnormal profit Optimum purchase rule Equi marginal rule Price taker Scarcity Your definition Correct definition A profit more than that required to keep the firm in its present activity A profit just enough to keep the firm in its present activity A level of profit that is not enough to keep the firm in its present activity Consumers who want to maximise utility should purchase more of both goods until P = MU Consumer equilibrium is reached when all income is spent and MU divided by price is = for two goods The firm has no control over the price and must accept the market price Where there are not enough resources to satisfy our unlimited wants Duopoly Only two sellers in the market Monopsony Only one buyer in the market Type of competition where Perfect the participants have no competition control over the price and are price takers Firms compete with each Non price other buy trying to make competition their products better or appear better. Hide the correct definition on the right by folding the page. Use a pencil to re-write these definitions in the middle column. Rub out and repeat several times.