Economics 2

Production function: specifies the maximum with a given Q of inputs

Marginal product: the extra output produced by 1 additional unit  

productivity  : is a concept measuring ratio of total output to a weigthed average of inputs

fixed cost : are expenses that must be paid even if the firm produce 0 outputs

total cost: represents the lowest total dollar expense needed to produce each level of output

marginal cost : extra or additional cost of producing 1 extra unit of output

average cost : is the TC/Q-average fixed cost: FC/Q-average variable cost: VC/Q

income statement: statement of the profit or loss (acc)

opportunity cost: is the value of the most valuable GorS forgone

monopoly: single seller with the complete control over the industry

oligopoly: few sellers

monopolistic competition: in this situation a large number of sellers produce diferientiated prodcuts

natural monopoly: market in which industry´s output can be effieciently produced only by a single firm

barriers to entry are factors that make hard for new firms to enter an industry

• Legal restrictions
• High cost of entry
• Advertising and product differentiation

HHindex: this is calculated by summing the squares of each participant market share

Four-firm concentration ratio: measures the fraction of the market accounted for by the 4 largest firms

Nature of imperfect competition: cost, barriers to entry

Collusion: When the firms in an oligopoly actively cooperate each other

Cartel: independent firm producing similar products that work together to rise prices