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6 Cards in this Set

  • Front
  • Back
What is perfect competition?
Perfect competition is a firm behavior that occurs when many firms produce identical products and entry is easy.
shutdown price
the minimum point of the average-variable-cost curve
break-even price
a price that is equal to the minimum point of the average-total-cost curve
economic efficiency
when the price of a good or service just covers the marginal cost of producing that good or service and people are getting the goods they want
producer surplus
the difference between the price firms would have been willing too accept for their products and the price they actually receive
Definition of Perfect Competition
1. There are many sellers
2. The products sold by the firms in the industry are identical
3. Entry is easy, and there are many potential entrants
4. Buyers and sellers have perfect information