Chapter 24 Terms 102 - Perfect competition: A market...

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Perfect competition: A market structure in which the decisions of individual buyers and sellers have no effect on market price. The Rational Behavior Model: The analysis can be carried on in terms of any activity. An activity will be increased when Marginal Benefit (MB) > Marginal Cost (MC). An activity will be decreased or not be carried out if MC > MB. (MB = MC) Using Marginal Analysis to Determine the Profit-Maximizing Rate of Production: The use of marginal analysis (point method) to determine the profit-maximizing rate of production is preferred to comparing total cost and revenue (graph method). The results are the same, but business decisions are really made on the margin where marginal benefits and costs are compared. Comparing Total Costs with Total Revenues: The firm will maximize profits where the total revenue curve exceeds the total cost, the sum of total fixed and total variable costs, by the greatest amount. Marginal Revenue:
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This note was uploaded on 06/06/2011 for the course ECON 102 taught by Professor Dsilvia during the Fall '11 term at Moraine Valley Community College.

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Chapter 24 Terms 102 - Perfect competition: A market...

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