Chapter 23 Definitions Flashcards
Perfect Competition
A market structure in which the decisions of individual buyers and sellers have no effect on market price
Perfect Competition
A firm that is such a small part of the total industry that it cannot affect the price of the product it sells
Perfectly Competitive Firm
A perfectly competitive firm that must take the price of its product as given because the firm cannot influence its price
Price Taker
Price per unit times quantity sold
Total Revenues
The rate of production that maximizes the difference between total revenues and total costs. and the rate of production at which marginal revenue equals marginal cost
Profit-maximizing rate of production
The change in total revenues resulting from a one-unit change in output (and sale) of the product in question
Marginal revenue
The price that covers average variable costs. It occurs just below the intersection of the marginal cost curve and the average variable cost curve
Short-run shutdown price
The price at which a firm’s total revenue equal its total costs. At the break-even price, the film is just making a normal rate of return on its capital investment. (It is covering its explicit and implicit costs)
Short-run break-even price
the set of points showing the minimum prices at which given quantities will be forthcoming; also known as the market supply curve
Industry supply curve
Compact ways on conveying economic decision makers information needed to make decisions. An effective ______ not only conveys information but also provides the incentive to react appropriately. Economic profits and economic losses are ______
Signals
A market supply curve showing the relationship between prices and quantities after firms have been allowed the tie to enter into or exit from an industry, depending on whether there have been positive or negative economic profits
Long-run industry supply curve
An industry whose total output can be increased in the long run without an increase in input prices. Its long-run supply curve is horizontal.
Constant-cost industry
An industry in which a long-run increase in industry output is accompanied by an increase in input prices, such that the long-run industry supply curve slopes upward
Increasing-cost industry
An industry in which an increase in output in the long run leads to a reduction in input prices, such that the long-run industry supply curve slopes downward
Decreasing-cost industry
A system of pricing in which the price charged is equal to the opportunity cost to society of producing one more unit of the good or service in question. The opportunity cost is the _____________ to society
Marginal cost pricing
A situation in which an unrestrained market operation leads to either too few or too many resources going to a specific economic activity
Market failure
