bsns 113 final exam newest actual exam complete qu
bsns 113 final exam newest actual exam
bsns 113 final exam newest
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BSNS 113 FINAL EXAM NEWEST ACTUAL EXAM COMPLETE
QUESTIONS AND CORRECT ANSWERS (VERIFIED ANSWERS) |
ALREADY GRADED A+||BRAND NEW!!
1. Business behaviour in the market conditions: How businesses behave
depends on the conditions in the market that they supply
- The number of other suppliers (how does the firm react to the actions of
competitors?)
- Easy or difficult entry and exit the market
- Competitor's products identical or similar (perfect vs imperfect substitutes)
2. Industrial Organisation (I.O.): I.O. economists study how firms react to
these and other market conditions
3. Highly competitive markets: - Many suppliers, "easy" entry (low entry
barriers ’ zero economic profit in the long run)
If homogenous product ’ perfect competition
If differentiated product ’ monopolistic competition
4. Less competitive markets: - Difficult entry (high entry barriers) ’ potential long-
run profitability
One supplier, no good substitutes ’ Monopoly
'Few' suppliers, same or close substitutes ’ Oligopoly (lots of strategic interaction)
5. Firm's objective: To maximise profit
6. How do we get from production to profit?: - Sell output and gain revenue -
Use inputs and pay costs
The quantity produced connects these two
7. Total revenue (TR): The amount a firm receives for its sale of output
8. Profit/À: Total revenue (from production) - total costs (for the production)
9. Variations with changes in the structure: - Revenue structure varies with
market structure
- Cost structure doesn't vary with market structure
10. Accounting Profit: Accountants measure the accounting profit as the firm's
total revenue minus the firm's explicit cost
11. Economic Profit: Economists measure a firm's economic profit as total
revenue minus explicit and implicit costs (including total opportunity cost
,13. Explicit costs: Input costs that require a direct outlay of money by the firm
14. Implicit costs: Input costs that do not require an outlay of money by the fir
15. Production function: Shows the relationship between the quantity of inputs
used to make a good and the quantity of output of that good
16. Production equation: qt = f(K, L, N) where: K: capital
L: labour
N: natural resources or raw materials
f: 'function of' represents the state of technology
17. Time frames: The length of time frames varies by the product
18. The 'short-run': Sufficiently short so that at least one input cannot be varied,
i.e., is 'fixed'
19. The 'long run': Sufficiently long so that all inputs can be varied
20. The 'very long run': Sufficiently long that the technical relationship, f, changes
21 Marginal product: - The marginal product of any input in the production
process is the increase in output that arises from an additional unit of that input
- The production function can be used to determine the costs of production
22. Diminishing marginal product: - The marginal product of an input declines
as the quantity of the input increases
- Short-run situation where at least one input is fixed. May not be present initially
but will arise at some point
23. Cost curve: The total-cost curve shows the relationship between the quantity
a firm can produce and its total costs
24. Total cost (TC): - The amount a firm pays for inputs into production
- On the cost curve TC gets steeper as the quantity of output increases because of
diminishing marginal product
- Made up of fixed and variable costs
25. Average fixed cost: Average fixed cost = total fixed cost/quantity
26. Average variable cost: Average variable cost = variable cost/quantity
27. Total Cost: Total Cost = Fixed Cost + Variable Cost
28. Marginal cost (MC): - Measures the increase in total cost that arises from an
extra unit of production
- Marginal cost is essentially the gradient of the total cost curve
29. Marginal cost U-shape: Decreasing MC means that each unit is cheaper to
produce than the last (due to specialisation) and after some point it starts increase
, which is where each additional unit is more expensive than the last (due to
diminishing marginal product)
30. Three important Properties of cost curves: - Marginal cost eventually rises
with the quantity of output
- The average total cost curve is U-shaped
- MC crosses AC at the efficient scale (i.e. minimum AC)
31. Marginal cost eventually rises with the quantity of output: Due to
diminishing marginal product
32. The average total cost curve is U-shaped: - At very low levels of output,
ATC is high because TFC is spread over only a few units but declines as output
increases because AFC decreases
- AC starts rising because AVC rises substantially
- Efficient scale of the firm = the quantity that minimises the AC
33. MC crosses AC at the efficient scale (i.e. minimum AC): - Whenever MC is
less than AC, AC must be falling (as MC drags it down)
- Whenever MC is greater than AC, AC must be rising (as MC drags it up)
- This implies that MC must be equal to AC where AC is neither falling nor rising
(the point where MC does not have an affect on AC)
34. Other features of the cost curve: - Average fixed cost is always going down
- Difference between average cost and average variable cost gets smaller as we
move from left to right because the gap between is the average fixed cost which
will always be going down
35. Returns of scale: Describes what happens to long-run returns as the scale
of production increases, when all input levels are variable
36. Economies of scale: Long-run average total cost falls as the quantity of
output increases
37. Diseconomies of scale: Long-run average total cost rises as the quantity of
output increases
38. Constant returns to scale: Long-run average total cost stays the same as
the quantity of output changes
39. Features of Competitive Markets: - There are many buyers and sellers in
the market
- The goods offered by the various sellers are largely the same
- There is perfect information
- Price takers
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