Chapter 9 Flashcards
Constant Cost Industry
An industry in which the long-run supply curve is horizontal because each firm’s cost curves are unaffected by changes in industry output
Decreasing cost Industry
An industry in which the long-run supply curve slopes downward because each firm’s LRATC curve shifts downward as industry output increases
Firm’s Supply Curve
A curve that shows the quantity of output a competitive firm will produce at different prices
Increasing cost industry
An industry in which the long run supply curve slopes upward because each firm’s LRATC curve shifts upward as industry output increases
Long-run supply curve
A curve indicating price and quantity combinations in an industry after all long-run adjustments have taken place
Market Signals
Price changes that cause changes in production to match changes in consumer demand
Market Structure
The characteristics of a market that influence how trading takes place
Market Supply Curve
A curve indicating the quantity of output that all sellers in a market will produce at different prices in the short run
Normal Profit
Another name for zero economic profit
Perfect Competition
A market structure in which there are many buyers and sellers, the product is standardized, sellers can easily enter or exit the market, and buyers and sellers are well informed
Price taker
A firm that treats the price of its product as given and beyond its control
Shutdown Price
The prce at which a firm is indifferent between producing and shutting down
