Short run and long run eq. in P.C Flashcards
1
Q
What is the obj of all firms
A
To maximize profits
2
Q
What is the firm’s equillibrium
A
The price and output at which the firm maximizes profit
3
Q
When if profit maximized
A
When MR=MC
4
Q
What happens to price or average revenue under P.C
A
Price or average revenue is constant and equal to marginal revenue
P=AR=MR
5
Q
What happens in the short run
A
Firms cannot enter or exit
6
Q
What happens in the long run
A
Firms have freedom to enter of exit and entry and this affects the firms equilibrium
