ECON 103 Book Defintions

ECON 103 Book Defintions - Book Defintions Adam Smith 1776...

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Book Defintions Adam Smith – 1776 wealth of nations Antitrust Law – is law that regulates and prohibits certain kinds of market behavior, such as monopoly and monopolistic practices. Average Cost Pricing Rule – pricing to cover total cost means setting price equal to average cost. Average cost Pricing Rule – sets price equal to average cost. Average Fixed Cost (AFC) – is total fixed cost per unit of output. Average Product – of labor is equal to total product divided by the quantity of labor employed. Average Total Cost (ATC) – is total cost per unit of output. Average Variable Cost (AVC) – is total variable cost per unit of output. Barriers to Entry – legal or natural constraints that protect a firm from potential competitors. Big Tradeoff – the tradeoff between equality and efficiency Bilateral Monopoly – when a union (monopoly seller) faces a monopsony buyer. Black Market – an illegal market in which the price exceeds the legally imposed price ceiling. Budget Line – describes the limits to its consumption choices. Budget Line – describes the limits to its consumption choices. Capture Theory – of regulation is that regulation is in the self-interest of producers. Cartel – is a group of firms acting together –colluding- to limit output, raise price, and increase economic profit.
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Collusive Agreement – is an agreement between two or more producers to form a cartel to restrict output, raise the price, and increase profits. Command System – is a method of organizing production that uses managerial hierarchy. Constant Returns to Scale – are features of a firm’s technology that lead to constant long-run average cost as output increases.* when constant returns to scale are present, the LRAC curve is horizontal. Consumer Equilibrium – is a situation in which a consumer has allocated all his or her available income in the way that, given the prices of goods and services. Contestable Market – a market in which firms can enter and leave so easily that face competition from potential entrants. Cooperative Equilibrium – in which the players make and share the monopoly profit is possible. Copyright – is an exclusive right granted to an author or composer of a literary musical, dramatic, or artistic work. Corporation – is a firm owned by one or more limited liability stockholders. Craft union – is a group of workers who have a similar range of skills but work in many different industries. Derived Demand – the demand for goods and services produced by the factor. Diminishing Marginal Rate of Substitution – is a general tendency for a person to be willing to give up less of good y to get one more unit of good x, and at the same time remain indifferent as the quantity of x increases. Diminishing Marginal Returns – occur when the marginal product of an additional worker is less
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ECON 103 Book Defintions - Book Defintions Adam Smith 1776...

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