1. Sides Game

2. SHORT RUN
Period during which some resources are fixed

3. Minimum Efficient Scale

4. LONG RUN
Period during which all resources are variable

5. INTERSECTS (EQUAL TO) MPP
Point where APP reaches its maximum
*REMINDER APP AND MPP ARE SAME AS AP AND MP

6. MPP = 0
Point where TPP reaches its maximum

7. Diseconomies of Scale

8. 3 things = price in perfect competitionMR AR D

9. Profit maximizing Q occurs
____ = _____
MR=MC

10. This represents a series of ___ SRATCs

11. DECREASING
If MP is increasing, MC is

12. In the short run, a firm producing where MR = MC with a price below AVC should
SHUTDOWN

13. In the short run, a firm will continue to produce at a loss if price is between _____ and _____
ATC AND AVC

14. Will firms enter, leave, or neither? ENTER (POSITIVE ECONOMIC PROFIT)

15. If Marginal Cost of the 6th unit is $10 and the AVC of 5 units is $12, the AVC will _____ from Q5 to Q6. DECREASE

16. _________ cost industry DECREASING
LRS

17. _________ cost industry INCREASING
LRS

18. _________ cost industry CONSTANT
LRS

20. Economies of Scale

21. MC eventually increase because of diminishing MARGINAL RETURNS

22. AFC BETWEEN B AND C A B C

23. AVC = C A B C

24. Individual firm’s demand curves are
HORIZONTAL
PERFECTLY ELASTIC

25. Market demand curves are
DOWNWARD SLOPING

26. TFC = C A B C

27. Perfectly competitive firms are price _______
TAKERS

28. If price is greater than MC, then a firm should
PRODUCE MORE

29. What is a firm’s short run supply curve?
IT IS THE MARGINAL COST CRUVE ABOVE AVC
POINTS DROP BACK TO WHOLE Q AMOUNTS

30. Constant Returns to Scale

31. AP = B Q U A N T I Y A B
LABOR C

32. MP = C Q U A N T I Y A B
LABOR C

33. TP = A Q U A N T I Y A B
LABOR C

34. ATC = B A B C