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A level Year 2 Microeconomics

Quiz by CharlieRich16
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Last updated: October 13, 2022
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First submittedDecember 7, 2021
Times taken17
Average score40.7%
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Hint
Answer
Total revenue - Total cost
Accounting profit
When there is a wide-ranging agreement among several firms in a market
Cartel
Secret or illegal cooperation in order to deceive other firms / achieve a common goal
Collusion
When an economy is allocating scarce resources to meet society's wants and needs (P=MC) (Eff)
Allocative
Lead to a rise in a firms long-run average costs
Diseconomies of Scale
A small number of large firms produce most of the output of an industry (MS)
Oligopoly
When organisational wastage leads to a loss of efficiency (Eff)
X
Costs that do not change with output
Fixed cost
When AR < AC causing firms to leave the market
Subnormal profit
A formal agreement - when firms agree to fix prices and quantity (illegal in EU, UK and US) (Collusion)
Overt
Total revenue - Total cost - Opportunity cost
Economic profit
Focusses on the change in choice and quantity over time; linked with innovation (Eff)
Dynamic
Unit cost advantages from expanding the scale of production in the long-run
Economies of Scale
The characteristics of a market which determine the behaviour of firms
Market Structure
Hint
Answer
A large number of small suppliers producing non-homogenous goods so have some price setting power (MS)
Monopolistic Competition
The market share of the largest firms in the industry
Concentration Ratio
Informal agreement - firms monitor one another and copy each others actions (Collusion)
Tacit
In perfect competition, when price = AVC
Shutdown point
Any profit made above normal profit causing new firms to enter the market (AR>AC)
Supernormal profit
In highly contestable markets, firms enter and leave in order to make short term supernormal profits
Hit and Run
A large number of small suppliers, none of which is large enough to dominate the market (MS)
Perfect competition
How easy it is for new firms to enter an industry/market
Contestability
Occurs when a whole industry grows larger and firms benefit from lower long-run average costs (EoS)
External
Producing at the lowest possible cost of production (MC=AC) (Eff)
Productive
Fixed cost + Variable cost
Total cost
Costs that are dependant on output
Variable cost
Costs of production which are not recoverable if a firm leaves the market
Sunk Costs
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