Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
25 Cards in this Set
- Front
- Back
|
A competitive market is sometimes called...
|
a perfectly competitive market
|
|
|
Three characteristics of competitive markets
|
There are many buyers and sellers in the market
The goods offered by the sellers are relatively the same Free entry and exit |
|
|
Profit
|
TR-TC
|
|
|
Total revenue
|
P x Q
|
|
|
Average revenue
|
TR/Q
|
|
|
Marginal revenue
|
the change in total revenue from an additional unit sold
change in TR/change in Q |
|
|
What is specific about marginal revenue for competitive markets?
|
MR=P
|
|
|
What is the goal of competitive market?
|
to maximize profit
|
|
|
Competitive firms are price....
|
takers
|
|
|
In a competitive market, the price of the good equals both....
|
average revenue and marginal revenue
|
|
|
A firm's marginal cost curve is its....
|
supply curve
|
|
|
Entrance and exits affect the quantity demanded. When there is easy entry and exit...(related to price)
|
price goes down and revenue goes down
|
|
|
Price changes in industry effects...
|
quantity demanded in firms
|
|
|
Social efficiency
|
P=MC
occurs in short run and long run |
|
|
Productive efficiency
|
firm is producing at the lowest ATC
occurs in long run |
|
|
In the long run, firms will enter and exit the market until....
|
profit is driven to zero
|
|
|
The long run market supply curve is...
|
horizontal
|
|
|
What should a firm do if TR<TC
|
exit
|
|
|
What should a firm do if P<ATC
|
exit
|
|
|
What should a firm do if P>ATC
|
enter
|
|
|
What should a firm do if TR>TC
|
enter
|
|
|
What should a firm do if TR<VC
|
shut down
|
|
|
What should a firm do if P<AVC
|
shut down
|
|
|
If MR>MC a firm should...
|
increase output
|
|
|
If MC>MR a firm should...
|
decrease output
|
