Sept 11 2017 quiz on some micro terms
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| Opportunity cost | The alternatives that have to be done without in order to have an item.
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| Centrally planned economy | Where the state controls and directs all economic activity.
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| Factors of production | The resources required to produce goods and services.
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| Free Enterprise Economy | Where economic activity is undertaken by companies and indiviuduals who are free to operate without undue government interference.
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| Mixed Economy | Where state and private enterprises exist but the government exercises a certain amount of regulation.
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| External economies of scale | That factors that lower the average cost of production as the industry grows in size and that benefits all firms in the industry.
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| External diseconomies of scale | That factor that cause average cost of production to rise as output expands and that are common to every firm in the industry.
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| Internal economies | The factors that lower a firms average cost of production as the firm expands in size.
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| Internal diseconomies | The factors that cause a firms average cost of production to rise once the firms reaches a certain size.
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| Commodity markets | The markets where major commodities or raw materials are bought and sold.
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| Final market | A market that supplies goods and services that give consumers utility and for which they are willing to pay a price.
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| Intermediate market | A market where a good is sold to be used as an input in the production of another good.
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| Complemetary goods | Goods that are in joint demand. The use of one involves the use of the other.
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| Substitute good | Goods that satisfy the same need and so can be used instead of each other.
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| Capacity constraint | The physical limit to the quantity of good a firm is able to supply.
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| Perfectly inelastic supply | A situation where quantity supplied is fixed regardless of price.
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| Cross elasticity of demand | The responsiveness of the demand for one good to a change in the price of another good.
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| Income elasticity of demand | The responsiveness of demand for a good to changes in income.
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| Unit elasticity of demand | A good is said to have unit elasticity of demand if the proportionate change in quantity demanded is equal to the proportionate change in price.
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| Law of Diminishing Marginal Returns | If increasing quantities of a variable factor are combined with a given amount of a fixed factor eventually a stage will be reached where the addition to total output (that is, marginal output) will decline.
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| Marginal cost | The change in total cost as a result of producing one extra unit of output.
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| Supernormal profit (SNP) | Any profit received in excess of normal profit.
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| Free entry and exit | A situation where there are no restrictions preventing the entry of new firms to the industry or the exit of existing firms.
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| Long- run equilibrium | The combination of price and quantity that gives the firm the highest profit in the long run.
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| Short-run equilibrium | The combination of price and quantity that gives the firm the highest profit in the short run.
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| Barriers to entry | Obstacles preventing the arrival of new firms to compete with the monopolist.
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| Patent | A temporary monopoly granted to a company that has invented a new product or process so that it an recoup its costs before facing competition.
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| Price discrimination | The selling of the same good (or service) to different customers at different prices, where the difference in price is not caused by differences in costs.
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| Product differentiation | This is where the consumer can distinguish the product of one firm from that of all others because of branding of goods and competitive advertising.
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| Price rigidity | A reluctance on the part of the firm in oligopoly to change from the current price because any such change will cause a fall in total revenue.
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