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Question and answer sheets for ECON 1B03 Midterm 2
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Question and answer sheets for ECON 1B03 Midterm 2
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When the price floor is binding and set above the equilibrium priceSurplus
Average fixed cost + average variable cost
Total cost divided by the quantity of output
, Average total cost
LRAC stays the same over a range of output
Constant returns to scale
A cost suffered by society and the instigator isn't made to pay for their damage (ie.
Kayla keeps me up all night but she doesn't pay for my lost sleep)
Negative externality
The distribution of a tax burden
Tax incidence
The increase in total output from using one more unit of input
Represents the slope of the total product function
, Marginal product
The government will freeze prices at a predetermined level that they feel will make
members of society better off
Usually enacted when policymakers believe the market price is unfair to buyers or
sellers
Price controls
A firm's total revenue minus its total cost
Represented by π
Profit
When MP=AP, AP is...
Maximized
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