AP Micro Unit 3
Name _________________________________________-
Chapter 13 – Costs of Production
Profit = ___________+ ___________
Explicit Costs
Implicit Costs
Accounting Profit = ________ - ________
Economic Profit = ________ - ________
Production Function
Marginal Product (include equation & graph)
Diminishing Marginal Product
A. Definition
B. Reason why it occurs
Marginal Cost (include equation & graph)
Total Costs = ________ +_________
Variable Costs
Fixed Costs
ATC =
AFC =
AVC =
Efficient Scale
Relationship between Marginal Costs and Marginal Product
Costs in the Short Run vs Long Run
Long Run Average Cost Curve (LRATC)
Economies of Scale
Constant Returns to Scale
Diseconomies of Scale
Minimum Efficient Scale for LRATC
Economies of Scope (look up)
Why is the ATC curve U-Shaped?
MRP Definition & Formula –
Chapter 14 – Perfect Competition
Market Structure Characteristics (4)
Characteristics of Pure/Perfect Competition
Price Taker
Marginal Revenue/MR (include equation)
Total Revenue (TR) / Average Revenue (AR) Equations
Why does MR = D = AR = P for competitive markets?
Profit Maximizing Quantity is where _____=_______
Shutdown (and when do you choose this option)
Exit (and when do you choose this option)
Competitive Firm’s Short Run Supply Curve
Sunk Costs
Firm’s Long Run Supply Curve
When do new firms enter a competitive market?
Long run economic profit for competitive markets is _____
Productive Efficiency
Allocative Efficiency
Long Run Market Supply Curve for a Competitive Market
Demand curve for Competitive Market
Perfectly Competitive Labor Market
Increasing Cost Industry
Decreasing Cost Industry
Chapter 15 – Monopolies
Monopoly
Barriers to Entry
Natural Monopoly
Fair Price
Social Optimum Price
Demand Curve for a Monopoly
Price ___MR __MC for a Monopoly
Why do monopolies produce deadweight loss?
Price Discrimination
1st Degree (Perfect) Price Discrimination
2nd Degree Price Discrimination
3rd Degree Price Discrimination
Why & how do governments regulate natural monopolies?
Monopsony
Bilateral Monopoly
Chapter 16 – Monopolistic Competition
Demand curve for firms in monopolistic competition?
Long run economic profits for firms in monopolistic comp?
Market Niche
Why is differentiation important for firms in monopolistic comp?
Real Product Differentiation
Perceived Product Differentiation
Why is long run economic profits = zero from firms in monopolistic comp?
Excess Capacity
Markup over Marginal Costs
Chapter 17 - Oligopolies
Concentration Ratio
Oligopoly
Cartels
Why do legal cartels seek out government regulation?
Horizontal Mergers / Vertical Mergers
Collusion
Collusive vs non-collusive Oligopolies
Price Leadership
Game Theory
Nash Equilibrium
Payoff Matrix
Prisoner’s Dilemma
Be Able to Graph
MP
MC
Total Cost Curves (TC, FC, VC)
Average Cost Curves
Perfect Comp
1.
2.
3.
4.
SR Profit
SR loss (stay in biz)
SR loss (shutdown)
Long Run adjustment for all
a. Inc. Cost
b. Dec Cost
c. Constant Cost
Perfectly Competitive Labor Market
Monopoly
Natural Monopoly
Perfect Price discrimination
Monopsony
Monopsony w/ min. wage
Monopolistic SR & LR
1. Profit
2. Loss