Vocabulary for Exam 3 - Vocabulary for Exam 3 LRATC Long run average total cost The lowest cost at which the firm can produce any given level of output

Vocabulary for Exam 3 LRATC- Long run average total cost- The lowest cost at which the firm can produce any given level of output Economies of Scale- When inputs are increased by some percentage and output increases by a greater percentage, causing units to fall Constant Returns to Scale- When inputs are increased by some percentage and output increases by an equal percentage, causing units to remain constant Diseconomies of Scale- When inputs are increased by some percentage and output increases by a smaller percentage, causing units to rise Minimum Efficient Scale- The lowest output level at which average total costs are minimized Market Structure- The environment of a firm, the characteristics of which influence the firm’s pricing and output decisions Perfect Competition- A theory of market structure based on 4 assumptions: there are many sellers and buyers, sellers sell a homogeneous good, buyers and sellers have all relevant information, and there are no entry or exit barriers Price Taker-