Chapter 12 Keyterms

Chapter 12 Keyterms - firm is indifferent between producing...

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Chapter 12: Perfect Competition Perfect competition: a market in which there are many firms each selling an identical product; there are many buyers; there are no restrictions on entry into the industry; firms in the industry have no advantage over potential new entrants; and firms and buyers are well informed about the price of each firm’s product Price taker: a firm that cannot influence the price of the good or service it produces Total revenue: the value of a firm’s sales. It is calculated as the price of the good multiplied by the quantity sold Marginal Revenue: the change in total revenue that results from a one-unit increase in quantity sold. It is calculated as the change in total revenue divided by the change in quantity sold Shutdown point: the output and price at which the firm just covers its total variable cost. In the short run, the
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Unformatted text preview: firm is indifferent between producing the profit-maximizing output and shutting down temporarily. Short-run market supply curve: a curve that shows the quantity supplied in market at each price when each firm’s plant and the number of firms remain the same External economies: factors beyond the control of a firm that lower the firm’s costs as the industry produces a larger output External diseconomies: factors outside the control of a firm that raise the firm’s costs as the industry produces a larger output Long-run market supply curve: a curve that shows how the quantity supplied in a market varies as the market price varies after all the possible adjustments have been made, including changes in each firm’s plant and the number of firms in the market...
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This note was uploaded on 12/06/2010 for the course PSYCH PSYC 1000 taught by Professor Atkinson during the Fall '10 term at UWO.

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