BUS 207 Final Exam Questions with Verified Answers
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Course
PNR 207
Institution
PNR 207
average cost - Answer-- the total cost divided by the units of output produced
- AC = TC/Q
average fixed cost - Answer-- the fixed cost divided by the units of output produced
- AFC = FC/Q
average variable cost - Answer-- the variable cost divided by the units of output produced
- AVC = VC...
BUS 207 Final Exam Questions with
Verified Answers
average cost - Answer-- the total cost divided by the units of output produced
- AC = TC/Q
average fixed cost - Answer-- the fixed cost divided by the units of output produced
- AFC = FC/Q
average variable cost - Answer-- the variable cost divided by the units of output
produced
- AVC = VC/Q
bandwagon effect - Answer-the situation in which a person places greater value on a
good as more and more other people possess it.
Nash-Bertrand equilibrium - Answer-A set of prices such that, holding the prices of all
other firms constant, no firm can obtain a higher profit by choosing a different price.
bundling - Answer-a type of sale in which two or more goods or services are combined
and offered at a single price.
cartel - Answer-a group of firms that explicitly agree (collude) to coordinate setting
prices or quantities.
total cost - Answer-- the sum of a firm's variable cost and fixed cost
- TC = FC + VC
Nash-Cournot Equilibrium - Answer-a set of quantities chosen by firms such that,
holding the quantities of all other firms constant, no firm can obtain a higher profit by
choosing a different quantity.
deadweight loss (DWL) - Answer-the net reduction in total surplus from a loss of surplus
by one group that is not offset by a gain to another group from an action that alters a
market equilibrium.
diseconomies of scale - Answer-the property of a cost function whereby the average
cost of production rises when output increases.
duopoly - Answer-An oligopoly with only two firms
durable good - Answer-a product that is usable for a long period, perhaps for many
years
, economically efficient (for a producer) - Answer-minimizing the cost of producing a
specified output level.
economies of scale - Answer-the property of a cost function whereby the average cost
of production falls as output expands.
economies of scope - Answer-the situation in which it is less expensive to produce
goods jointly than separately.
fixed cost - Answer-- a production expense that does not vary with output.
- costs primarily used in the the pizza industry
group price discrimination - Answer-- a situation in which a firm charges each group of
customers a different price.
- third degree price discrimination
isocost line - Answer-all the combinations of inputs that require the same (iso-) total
expenditure (cost).
learning by doing - Answer-the productive skills and knowledge that workers and
managers gain from experience.
learning curve - Answer-the relationship between average cost and cumulative output.
Lerner Index - Answer-the ratio of the difference between price and marginal cost to the
price
marginal cost (MC) - Answer-- The amount by which a firm's cost changes if the firm
produces one more unit of output.
- The derivative of Total Cost
market failure - Answer-a non-optimal allocation of resources such that total surplus in a
market is not maximized.
market power - Answer-the ability of a firm to significantly affect the market price
monopolistic competition - Answer-- a market structure in which firms have market
power, but free entry occurs in the long run until no additional firm can enter and earn a
positive long-run profit.
- Characterized by product differentiation and price-setting firms
monopoly - Answer-the sole supplier of a good that has no close substitute
Nash Equilibrium - Answer-a set of strategies such that, holding the strategies of all
other players constant, no player can obtain a higher pay off by choosing a different
strategy.
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