TOPICS REVIEW FOR SECOND EXAM
Chapter 4 Definitions of: Total utility Marginal utility Diminishing marginal utility Law of diminishing marginal utility Price elasticity = % change in quantity demanded / % change in price Elastic demand Inelastic demand Price elasticity vs. total revenue vs. price cuts Determinants of price elasticity Substitute goods Complementary goods Chapter 5 Definitions of: Production schedule Production function Law of diminishing returns Short run Long run Marginal physical product = Change in total output / Change in input quantity Total cost = variable costs + fixed costs Fixed costs Variable costs Average total cost = Total cost / total output
Marginal cost = Change in total cost / change in total output decision: Supply/production short-run long-run Economic costs vs. accounting costs Economic profit vs. accounting profit Chapter 6 Market structure different types of firms in the market Perfect competition Monopolistic competition Duopoly Oligopoly Monopoly
Market power Price taker Firm demand versus market demand for perfectly competitive firm Production decision Total revenue Profit Marginal cost How do perfectly competitive firms choose which production level maximizes profit? How does a firm determine its supply curve? What affects the firm's and the market's supply curve? What happens when an industry has economic profits? What are the characteristics of a competitive market? General profit maximizing rule