Chapter 9 Flashcards
1
Q
What is a price taker?
A
Firms that have no control over the price set by the market. They “accept” the price determined by the overall supply and demand conditions that regulate the market.
2
Q
What is the profit maximizing rule?
A
It states that profit-maximization occurs when the firm chooses the quantity that causes marginal revenue to be equal to marginal cost, or MR=MC.
3
Q
Conditions for profit
A
P>ATC: The price is greater than the average total cost of production
