Untitled Quiz

The demand curve slopes downwards because as the price of a good increases, the quantity demanded decreases, all other factors remaining constant.

The supply curve slopes upwards because as the price of a good increases, producers are willing to supply a higher quantity of the good.

A movement along the curve represents a change in quantity demanded or supplied due to a change in price. A shift of the curve represents a change in factors other than price that affect demand or supply.

Consumer surplus is the difference between the maximum amount a consumer is willing to pay for a good and the actual price they pay.

Producer surplus is the difference between the minimum amount a producer is willing to accept for a good and the actual price they receive.

A price floor is a minimum price set by the government below which a good cannot be sold. It aims to protect producers from low prices but can lead to surplus.

A price ceiling is a maximum price set by the government above which a good cannot be sold. It aims to protect consumers from high prices but can lead to shortage.

Deadweight loss is the loss of economic efficiency that occurs when the market equilibrium is not achieved, caused by price floors, price ceilings, or other market distortions.

The price elasticity of demand measures the responsiveness of quantity demanded to changes in price. It's calculated as the percentage change in quantity demanded divided by the percentage change in price.

When the quantity demanded changes significantly as the price changes. PED > 1

When the quantity demanded changes very little as the price changes. PED < 1

The impact of a price change on the total revenue.

The impact of a change in quantity demanded on the total revenue.

Total revenue increases.

Total revenue increases.

A measure of how responsive the quantity supplied of a good is to a change in its price.

A measure of how responsive the demand for one good is to a change in the price of another good.

A measure of how responsive the demand for a good is to a change in income.

The point where a firm's total profit is maximized, achieved by setting marginal revenue (MR) equal to marginal cost (MC).

The difference between a firm's total revenue (TR) and its total cost (TC). Total Profit = TR - TC

The change in total revenue that results from selling one more unit of output.

The change in total cost that results from producing one more unit of output.

A firm that accepts the market price for its product, as it has no power to influence the price.

A market structure where many small firms produce identical products, with free entry and exit, perfect information, and no influence on the market price.

The point where a firm in a competitive market will shut down production temporarily, if the price falls below the minimum of average variable cost (AVC).

The point where a firm in a competitive market will exit the industry permanently if the price falls below the minimum of average total cost (ATC).

A situation in perfect competition where firms earn just enough revenue to cover all their costs, resulting in no economic profit.

In a perfect competition, the point where price equals the minimum of average total cost (P=ACMIN).

The ability of a firm to influence the price of a good or service. This is a characteristic of firms that are not perfectly competitive.

A market structure where there is only one seller of a good or service, with no close substitutes. Monopolies have significant market power.

A situation where it is more efficient for one firm to produce the entire output of a good or service. This often occurs when there are high fixed costs involved in production.

A competitive firm operates in a market with many sellers and produces at P=MC, while a monopolist faces a downward sloping demand curve and produces at P>MR=MC, leading to a lower quantity and higher price compared to a competitive market.

The practice of charging different prices to different consumers for the same good or service. This is possible when the monopolist can segment the market.

A market structure with a few dominant firms having significant market power. This leads to strategic interactions between firms.

A measure of market concentration, calculated by squaring the market share of each firm and summing the results. A higher HHI indicates greater market concentration.