Exam3 - Flashcards(2) - The flashcards are formatted for...

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Price Takers 1. Many buyers and sellers 2. Goods offered are same 3. Free entry/exit
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Characteristics of perfect competition: Take the market price as a given (because many buyers and sellers and goods offered are the same).
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(P x Q)/ Q or Price P x Q
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Total revenue (TR) equation: Average revenue (AR) equation:
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Marginal Revenue ∆ Total Revenue ∆ Quantity
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Marginal revenue (MR) equation: Change in total revenue from selling one more unit.
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Quantity; Price Competitive Firm
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Can keep increasing its output without affecting market price. For a competitive firm, each one-unit increase in ____ causes revenue to rise by ____.
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Less than Greater than
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Increase quantity if marginal revenue (MR or P) is ____ marginal cost (MC) to increase profits. Decrease quantity if marginal revenue (MR or P) is ____ marginal cost (MC) to increase profits.
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Marginal Cost Curve Price
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What marginal revenue (MR) is equal to for competitive firms. A firm’s supply curve is its ____ (but not all of it).
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Shutdown Marginal Cost Curve
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Determines the firm’s quantity at any price. Short-run decision to not produce any output.
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Shutdown Exit
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dismantle and leave the industry. No revenue; fixed
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This note was uploaded on 08/30/2011 for the course ECO 2023 taught by Professor Underwood-caputo during the Fall '08 term at University of Central Florida.

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Exam3 - Flashcards(2) - The flashcards are formatted for...

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