Chapter 13: Perfect Competition Flashcards
1
Q
Describe the characteristics of a perfectly competitive market
A
1.) individual buyers and sellers are price takers
2.) consumers are indifferent between the standardized goods sold by different producers
2
Q
marginal revenue
A
1.) change in total revenue/change in quantity
2.) MR= Price
3.) MR= avg. revenue
3
Q
short-run shut down if
A
price<AVC
4
Q
long-run exit if
A
price<ATC
5
Q
average revenue
A
total revenue/quantity
6
Q
total revenue
A
price x quantity
7
Q
Profit maximization
A
Price=MR=MC
8
Q
only shut down in the
A
short run
9
Q
only exit in the
A
long run
10
Q
Explain why a long-run supply curve might slope upward
A
price has to rise to entice new firms to enter and increase the total quantity supplied
11
Q
accounting profit
A
total revenue-explicit costs
12
Q
economic profit
A
total revenue-explicit costs-implicit costs
