Unformatted text preview: At the profit-maximizing level of output, marginal revenue equals marginal cost Shutdown= a short-run decision not to produce anything b/c of market conditions Exit= a long-run decision to leave the market Sunk cost= a cost that has already been committed and cannot be recovered I.e. the last 2 years I’ve spent at college, b/c I can’t get those back (theoretically) REMEMBER: ECONOMIC PROFIT IS DIFFERENT FROM ACCOUNTING PROFIT Marginal Firm= the firm that would exit the market if the price were any lower. Because firms can enter and exit more easily in the long run than in the short run, the long-run supply curve is typically more elastic than the short-run supply curve. VC= AVC x Q...
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- Spring '08
- Economics, marginal cost Shutdown=, PROFIT Marginal Firm=