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12 Cards in this Set
- Front
- Back
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Perfectly competitive market
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1. Many buyers and sellers
2. All firms selling identical products 3. No barriers to new firms entering the market |
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Price taker
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a buyer or seller that is unable to affect the market price
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Profit
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total revenue minus total cost
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Average revenue
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total revenue divided by the quantity of the product sold
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Marginal revenue
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the change in total revenue from selling one or more unit of a product
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Sunk cost
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a cost that has already been paid and that cannot be recovered
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Shutdown point
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the minimum point on a firm's average variable cost curve; if the price falls below this point, the firm shuts down production in the short run.
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Economic profit
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a firm's revenues minus all its costs, implicit and explicit
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Economic loss
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a firm's total revenue is less than its total cost, including all implicit costs.
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Long-run competitive equilibrium
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the entry and ext of firms has resulted in the typical firm breaking even
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Long-run supply curve
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a curve that shows the relationwhip in the long run between market price and the quantity supplied
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Allocative efficiency
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production represents consumer preferences
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