14 Firms in Competitive Markets

Principles of Economics, 4th Edition (Student Edition)

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14. FIRMS IN COMPETITIVE MARKETS average revenue total revenue divided by the quantity sold competitive market a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker marginal revenue the change in total revenue from an additional unit sold sunk cost a cost that has already been committed and cannot be recovered 1. What is a Competitive Market? a. The Meaning of Competition i. There are many buyers and many sellers in the market ii. The goods offered by the various sellers are largely the same. iii. Firms can freely enter or exit the market b. The Revenue of a Competitive Firm 2. Profit Maximizing and Competitive Firm’s Supply Curve a. A simple Example of Profit Maximization b. The Marginal-Cost Curve and the Firm’s Supply Decision c. The Firm’s Short-Run Decision to Shut Down d. Spilt Milk and Other Sunk Costs e. The Firm’s Long-Run Decision to Exit or Enter a Market f. Measuring Profit in Our Graph for the Competitive Firm
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14 Firms in - 14 FIRMS IN COMPETITIVE MARKETS average revenue competitive market marginal revenue sunk cost total revenue divided by the quantity

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