7: Perfect Competition Flashcards
(11 cards)
For any firm they can max profit by producing and selly at a quanity at which?
Marginal revenue equals marginal cost
What are the characteristics that make perfect comp firms price takers?
Lots of firms and they are small relative to the market and they produce undifferentated products
Profit per unit is equal to?
Price minus average total cost
Short run supply curve od perfectly comp firm is given by
The marginal cost curve if price is equal to or greater than average variable cost. If less than quantity supplied is zero
Perfect comp firms are earning positive econ profit what will happen?
New firms will enter and price will fall until zero econ profit
The demand curve for the output of an individual perfect comp firm is
Perfectly elastic
Average revenue is equal to
Total revenue divided by the number of units per output and price
Econ cost is blank acounting cost and econ profit is black accounting profit
Greater than; less than
What is the characteristic that moves econ profit towards zero
Free entry and exit
When a firm is earning positive econ profit
Price is greater than average total cost
When an industry is experiencing zero econ profit marginal cost is equal to average total cost and this means
Average total cost curve is at its minimum
