Test 3 - Econ Perfect Competition Firms can easily identify...

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Econ Perfect Competition Firms can easily identify their rivals Price-taking producer, actions have no effect on the market Perfectly competitive market: all participants are price-takers Generally, consumers are always price-takers 3 conditions for perfect competition It must contain many producers with no large market share The consumers regard the product of all producers as equivalent Standardized product Free entry and exit, low fixed cost requirements Total Revenue = price x quantity Profit = total revenue – total cost Marginal Revenue Change in total revenue/charge in output (usually 1) Optimal Output rule Profit is maximized by producing the quantity of output at which the marginal cost of the last unit produced is equal to its marginal revenue Profit maximizing point is where marginal cost crosses MR curve Equations TR>TC the firm is profitable TR=TC the firm breaks even TR<TC the firm incurs a loss o TR/Q=P and TC/Q=ATC
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Test 3 - Econ Perfect Competition Firms can easily identify...

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