Vocabulary for Exam 3
LRATC- Long run average total cost-
The lowest cost at which the firm can produce any
given level of output
Economies of Scale-
When inputs are increased by some percentage and output increases by a
greater percentage, causing units to fall
Constant Returns to Scale-
When inputs are increased by some percentage and output increases
by an equal percentage, causing units to remain constant
Diseconomies of Scale-
When inputs are increased by some percentage and output increases by
a smaller percentage, causing units to rise
Minimum Efficient Scale-
The lowest output level at which average total costs are minimized
Market Structure-
The environment of a firm, the characteristics of which influence the firm’s
pricing and output decisions
Perfect Competition-
A theory of market structure based on 4 assumptions: there are many
sellers and buyers, sellers sell a homogeneous good, buyers and sellers have all relevant
information, and there are no entry or exit barriers
Price Taker-
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- Spring '08
- Saha
- Economics, Microeconomics, Economies Of Scale, output increases
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