Chapter 8: Perfect Competition Flashcards
1
Q
What is a perfectly competitive market?
A
a market with many buyers and sellers, identical products, are entry and exit into the market, and homogeneous firms facing the same costs of production
2
Q
What is marginal revenue?
A
the additional revenue a firm earns from selling another unit
3
Q
What happens when a firm is shut down?
A
a short-run decision not to produce during a specific period of time due to the current market conditions
4
Q
What are sunk costs?
A
costs that have already been committed and cannot be recovered
5
Q
What is a zero-profit condition?
A
the long-run condition of firms in perfect competition due to free entry and exit into the market
