Principles Of Micronomics an der Universität Wien | Karteikarten & Zusammenfassungen

# Lernmaterialien für Principles of Micronomics an der Universität Wien

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TESTE DEIN WISSEN
opportunity costs
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TESTE DEIN WISSEN
whatever must be given up to obtain some item
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TESTE DEIN WISSEN
rational people
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TESTE DEIN WISSEN
people who systematically and purposefully do the best they can to achieve their objectives
Lösung ausblenden
TESTE DEIN WISSEN
The goal of each firm is to maximize profit. It chooses to produce the quantity of milk that makes profit as large as possible. How can the firm find its profit-maximizing quantity?
Lösung anzeigen
TESTE DEIN WISSEN
By comparing marginal revenue and marginal cost: As long as marginal revenue exceed marginal cost, increasing the quantity produced raises profit. If marginal revenue is less than marginal cost is should decrease production. If the firm thinks at the margin and makes incremental adjustments to the level of production, it will end up producing the profit-maximizing quantity.
Lösung ausblenden
TESTE DEIN WISSEN

If oligopolists do not form a cartel

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TESTE DEIN WISSEN

they must each decide on their own how much to produce. At any time each well owner has the option to raise production by one gallon. in making this decision the well owner weighs the following two effects:

1. output effect: Because price is above marginal cost, selling one more gallon at the going price will raise profit
2. price effect: raising production will increase the total amount sold which will lower the price of the good and lower the profit on all other goods (already) sold.

If the output effect is larger than the price effect, the well owner will increase production.Eacholigopolistcontinues to increase production until these two marginal effects exactly balance, taking the other firms production as given.

How does the number of firms affects the marginal analysis of each oligopolist?The larger the number of seller, the less each seller is concerned about her own impact on the price market.When the oligopolygrowsin size, the magnitude of the price effect falls.When the oligopoly grows very large, the price effect disappears. In the extreme case, the production decision an individual firm no longer affects the market price. Each firm takes the market price as given when deciding how much to produced therefore increases productions long asp price is above marginal cost.

Therefore a large oligopoly is essentially a group of competitive firms.Acompetitive firm considers only the output effect when deciding on how much to produce:Because thecompettive firm is a price taker, the rice effect is absent.

Conclusion:As the number of sellers in an oligopoly grows larger, an oligopoly looks more and more like a  competitive market.The price approchaes marginal cost and the quantity produced approchaes the socially efficient level.
Lösung ausblenden
TESTE DEIN WISSEN
Two characteristics describe the long-run equilibrium in a monopolistically competitive market
Lösung anzeigen
TESTE DEIN WISSEN
• as in a monopoly market, price exceeds marginal cost: This conclusion arises because profit maximization requires marginal revenue to equal marginal cost and because the downward-sloping demand curve makes marginal revenue less than the price
• as in a competitive market, price equals average total cost. This conclusion arises because free entry and exit drive economic profit to zero.
Lösung ausblenden
TESTE DEIN WISSEN

Name the Ten Principles of Economics!

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TESTE DEIN WISSEN

A. How People Make Decisions

1. People face Trade- Offs
2. The Cost of Something Is What You Give Up to Get It
3. Rational People Think at the Margin
4. People Respond to Incentives
B. How People Interact
1. Trade Can Make Everyone Better Off
2. Markets Are Usually a Good Way to Organize Economic Activity
3. Governments Can Sometimes Improve Market Outcomes
C. How the Economy as a Whole Works
1. A Country's Standard of Living Depends on its Ability to Produce Goods and Services
2. Prices Rice When Government Prints Too Much Money
3. Society Faces a Short-Run-Trade-Off between Inflation and Unemployment
Lösung ausblenden
TESTE DEIN WISSEN
property rights
Lösung anzeigen
TESTE DEIN WISSEN
the ability of an individual to own and exercise control over scarce resources
Lösung ausblenden
TESTE DEIN WISSEN
market economy
Lösung anzeigen
TESTE DEIN WISSEN
an economy that allocates resources through the decentralized decisions of many firms and household as they interact in markets for goods and services
Lösung ausblenden
TESTE DEIN WISSEN
Scarcity
Lösung anzeigen
TESTE DEIN WISSEN
the limited nature of society's resources
Lösung ausblenden
TESTE DEIN WISSEN
market power
Lösung anzeigen
TESTE DEIN WISSEN
the ability of a single person or firm to unduly influence market prices
Lösung ausblenden
TESTE DEIN WISSEN
productivity
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TESTE DEIN WISSEN
the quantity of goods and services produced from each unit of labor input
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TESTE DEIN WISSEN
externality
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TESTE DEIN WISSEN
the impact of one person's actions on the well-being of a bystander (eg pollution)
Lösung ausblenden
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## Beispielhafte Karteikarten für deinen Principles of Micronomics Kurs an der Universität Wien - von Kommilitonen auf StudySmarter erstellt!

Q:
opportunity costs
A:
whatever must be given up to obtain some item
Q:
rational people
A:
people who systematically and purposefully do the best they can to achieve their objectives
Q:
The goal of each firm is to maximize profit. It chooses to produce the quantity of milk that makes profit as large as possible. How can the firm find its profit-maximizing quantity?
A:
By comparing marginal revenue and marginal cost: As long as marginal revenue exceed marginal cost, increasing the quantity produced raises profit. If marginal revenue is less than marginal cost is should decrease production. If the firm thinks at the margin and makes incremental adjustments to the level of production, it will end up producing the profit-maximizing quantity.
Q:

If oligopolists do not form a cartel

A:

they must each decide on their own how much to produce. At any time each well owner has the option to raise production by one gallon. in making this decision the well owner weighs the following two effects:

1. output effect: Because price is above marginal cost, selling one more gallon at the going price will raise profit
2. price effect: raising production will increase the total amount sold which will lower the price of the good and lower the profit on all other goods (already) sold.

If the output effect is larger than the price effect, the well owner will increase production.Eacholigopolistcontinues to increase production until these two marginal effects exactly balance, taking the other firms production as given.

How does the number of firms affects the marginal analysis of each oligopolist?The larger the number of seller, the less each seller is concerned about her own impact on the price market.When the oligopolygrowsin size, the magnitude of the price effect falls.When the oligopoly grows very large, the price effect disappears. In the extreme case, the production decision an individual firm no longer affects the market price. Each firm takes the market price as given when deciding how much to produced therefore increases productions long asp price is above marginal cost.

Therefore a large oligopoly is essentially a group of competitive firms.Acompetitive firm considers only the output effect when deciding on how much to produce:Because thecompettive firm is a price taker, the rice effect is absent.

Conclusion:As the number of sellers in an oligopoly grows larger, an oligopoly looks more and more like a  competitive market.The price approchaes marginal cost and the quantity produced approchaes the socially efficient level.
Q:
Two characteristics describe the long-run equilibrium in a monopolistically competitive market
A:
• as in a monopoly market, price exceeds marginal cost: This conclusion arises because profit maximization requires marginal revenue to equal marginal cost and because the downward-sloping demand curve makes marginal revenue less than the price
• as in a competitive market, price equals average total cost. This conclusion arises because free entry and exit drive economic profit to zero.
Q:

Name the Ten Principles of Economics!

A:

A. How People Make Decisions

1. People face Trade- Offs
2. The Cost of Something Is What You Give Up to Get It
3. Rational People Think at the Margin
4. People Respond to Incentives
B. How People Interact
1. Trade Can Make Everyone Better Off
2. Markets Are Usually a Good Way to Organize Economic Activity
3. Governments Can Sometimes Improve Market Outcomes
C. How the Economy as a Whole Works
1. A Country's Standard of Living Depends on its Ability to Produce Goods and Services
2. Prices Rice When Government Prints Too Much Money
3. Society Faces a Short-Run-Trade-Off between Inflation and Unemployment
Q:
property rights
A:
the ability of an individual to own and exercise control over scarce resources
Q:
market economy
A:
an economy that allocates resources through the decentralized decisions of many firms and household as they interact in markets for goods and services
Q:
Scarcity
A:
the limited nature of society's resources
Q:
market power
A:
the ability of a single person or firm to unduly influence market prices
Q:
productivity
A:
the quantity of goods and services produced from each unit of labor input
Q:
externality
A:
the impact of one person's actions on the well-being of a bystander (eg pollution)

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