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17 Cards in this Set
- Front
- Back
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price-taking producer
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producer whose actions have no effect on the market price of the good it sells
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price-taking consumer
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consumer whose actions have no effect on the market price of the good he/she buys
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perfectly competitive industry
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an industry in which producers are price-takers
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producer's market share
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fraction of the total industry output accounted for by that producer's output
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standardized product aka commodity
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when consumers regard the products of different producers as the same good
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there is free entry and exit when new producers can ____ enter into or leave that industry
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easily
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marginal revenue
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change in total revenue generated by an additional unit of output
marginal revenue=change in total revenue/change in output |
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optimal output rule
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profit is maximized by producing the quantity of output at which the marginal cost of the last unit produced is equal to its marginal revenue
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price-taking firm's optimal output rule
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price-taking firm's profit is maximized by producing the quantity of output at which the marginal cost of the last unit produced is equal to the market price
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marginal revenue curve
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shows how marginal revenue varies as output varies
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TR> TC, firm is ____
TR=TC, firm ____ TR< TC, firm ____ |
-profitable
-breaks even -incurs a loss |
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break-even price of a price-taking firm
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is the market price at which it earns zero profits
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short-run individual supply curve
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shows how an individual producer's optimal output quantity depends on the market pric
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shut-down price
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when market price is equal to minimum average variable cost. when this happens, a firm will cease production in the short run
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industry supply curve
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shows the relationship between the price of a good and the total output of the industry as a whole
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short-run market equilibrium
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when quantity supplied equals the quantity demanded
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long-run market equilibrium
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when the quantity supplied equals the quantity demanded, given that sufficient time has elapsed for entry into and exit from the industry to occur
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