Micro yr 2

• Profit is calculated as total revenue minus total cost
• Profits are maximized when marginal revenue equals marginal cost.
• What is the objective of growth maximization for a firm?

  Increase market share
• Profit satisficing involves firms aiming for a 'reasonable' level of profit instead of maximizing it.
• What is the main objective of utility maximization?

  Achieve satisfaction
• In economics, the short run is a period when at least one factor of production is fixed
• At what point does the marginal cost curve intersect the average cost curve?

  Minimum point
• Small businesses are essential to the success of the economy because they meet local needs and create employment.
• The term used when enough profits are produced to satisfy shareholders but not maximized is satisficing
• Benefits of high profit in a market economy

  1️⃣ Investment in R&D

  2️⃣ Reward for shareholders

  3️⃣ Attraction of new firms

  4️⃣ Tax revenues
• What is marginal cost defined as?

  Change in total cost from one more unit
• What is the dependency of a Zombie Company on a bank as illustrated in the image?

  Dependent for bailout

  
• What does the intersection of the MC and MR curves represent?

  Optimal output

  
• A key characteristic of perfect competition is a homogeneous product

  
• The traditional theory of the firm assumes that information is symmetric.