Perfect Competition – Flashcards
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total revenue minus the ___ and ____ costs of production is economic profit
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Explicit and implicit
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in a perfectly competitive market, homogeneity means that firms must charge the market price for the goods or services they produce, because
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There are hundreds of other perfectly god substitues
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the market is competitive
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profit equals_____ revenue minus_____ cost
multiplied by output
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average and average
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average revenue is the
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amount of revenue per unit of a product sold
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the demand for a perfectly competitive firm's product is a _____ line originating at the market price
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horizontal
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marginal revenue is the
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additional revenue associated with the sale of an additional unit
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the level of profit that occurs when total revenue is equal to total cost is known as _____ profit
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normal
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zero___ profit or normal profit is the revenue needed for a company to break even and meet opperating costs without a loss
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economic
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as the market priec decreases, all else held constant, a profit-maximizing firm can_____ its prodction
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lower
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a perfectly competitive firm shoul produce output until marginal ____ equals marginal___
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revenue and cost
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in a perfectly competitive market, we assume the product is identical in the minds of
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consumers
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in the ____ run , when at least one input is fixed, as the price rises, so does the level of output supplied
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short
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for a perfectly competitive firm, the market price is eual to
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marginal revenue, average revenue, demand
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when consumers are relatively sensitive to changes in price
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demand is considered elastic
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if the market price is below the average variable cost, the business is not bringing in enough revenue to compensate for the ____ cost
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variable
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by responding to changes in market price, competitive firms produce more of the products we value most and fewer of the products we value least, thereby achieving
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allocative efficiency
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the short run supply curve starts at the minimum average ___ cost
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variable
