Terms Study Guide - b

AP Micro-economics Test 1
*This list is incomplete.
Ch. 20
Elasticity of demand (and inelasticity)
Unit elasticity
Midpoint formula
Total revenue vs. elasticity/inelasticity
Price elasticity of supply
Market period vs. short-run
Cross-elasticity of demand
Income elasticity of demand
Price ceilings and black markets
Price floors and surpluses
Economic cost
Opportunity cost
Accounting cost
Explicit cost
Implicit cost
Economic profit
Normal profit
Total Product (TP)
Marginal Product (MP)
Average Product (AP)
Law of diminishing marginal returns
Fixed Costs (TFC)
Variable Costs (TVC)
Total Costs (TC)
Average costs:
Marginal Cost (MC)
(Curve shapes, meanings, equations and
Long-run cost curve (LATC)
Economies of scale (and reasons)
Constant returns of scale
Diseconomies of scale (and reasons)
Pure competition
Characteristics of pure competition
(including no long-run economic profits)
TR vs. (D=MR)…see p.440
Profit maximization (see p.442)
Break-even point
MR = MC rule (three characteristics)
Use an average cost model to calculate total profit
or loss
Shutdown case (p.446)
The MC curve and short-run supply
MC as short-run supply + ATC + perfectly
elastic demand (see p.449-450)
Long-run supply curve
Constant-cost industry
Increasing-cost industry
Decreasing-cost industry
Pure comp. and productive efficiency
(P=min.ATC; see p.456)
Pure comp. and allocative efficiency (P=MC; see
Consumer surplus (Last Word, p.459)
Ch. 24
Pure monopoly
Legal barriers to entry:
Natural Monopoly and LATC
Monopoly Demand
Monopoly Marginal Revenue (less than price)
MR = MC rule
Price discrimination
Monopoly power
Market segregation
No resale
…and monopolist profit
Socially optimal price (P=MC; see p.480)
Fair return price (P=ATC; see p.480)
Ch. 25
Monopolistic competition
Excess capacity (p.491-492)
Product differentiation
Non-price competition
Oligopoly (homogenous vs. differentiated)
Collusion/incentives and disincentives to cheat
Kinked demand curve
Entry barriers
Mutual interdependence
Concentration ratio
Herfindahl index
Oligopolistic game theory
Tacit understandings
Price leadership
(Know about both types of efficiency, and longrun vs. short-run profit/loss realities facing all four
market structures.)
*This list is incomplete.