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10 Cards in this Set
- Front
- Back
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industry
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group of firms producing a similar product
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long-run competitive equilibrium model
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model of firms in an industry in which free entry and exit produce an equilibrium such that price equals the minimum of average total cost
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free entry and exit
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movement of firms into and out of an industry that is not blocked by regulation,other firms or any other barriers
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long-run equilibrium
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a situation in which entry into and exit from an industry and complete and economic profits are zero, with price equal to ATC
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accounting profits
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total revenue minus total costs, where total costs exclude the implicit opportunity costs; this is the definition of profits usually reported by firms
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economic profits
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total revenue minus total costs, where total costs include opportunity costs, whether implicit or explicit
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normal profits
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the amount of accounting profits when economic profits are equal to zero
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long-run industry supply curve
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a curve traced out by the intersections of demand curves shifting to the right and the corresponding short-run supply curves
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external diseconomies of scale
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a situation in which growth in an industry causes average total cost for the individual firm to rise because of some factor external to the firm; it corresponds to an upward-sloping long-run industry supply curve
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external economies of scale
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a situation in which growth in an industry causes average total cost for the individual firm to fall because of some factor external to the firm; it corresponds to a downward-sloping long-run industry supply curve
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