Perfect competition
in perfect competition,
Firms cannot influence the the market price with product decisions.
in a perfectly competitive market, we assume the product is _______________ in the mind of consumers.
Homogeneous
In a perfectly competitive market, homogeneity means that firms can charge the market price for the goods or the services they produce, because:
There are hundreds of other perfectly god substitutes and the market is competitive
as the market price ____________________, all else held constant, a profit-maximizing firm can afford to expand its production.
increases
Identify the characteristics of a perfectly competitive market.
- producers who are price takers - Easy entry and exit - a large number of buyers and sellers - a standardized product
The market condition in which firms do not face incentives to enter or exit the market and firms earn a normal profit known as:
Long-run equilibrium
The extra or additional revenue associated with the production of an additional unit of output is called the __________________ revenue.
Marginal
A perfectly competitive firm should produce output until the point where:
Marginal revenue equals marginal cost.
In a perfectly competitive market, a single firm is a price taker, and therefore, can only charge the ________ price.
Market
_________ competition is a market structure characterized by the interaction of large numbers of buyers and sellers, in which sellers produce a standardized, or homogeneous, product.
perfect
In the short run, as the price rises,
quantity supplied rises
_____________ profit is also known as zero economic profit.
normal
Marginal revenue is the:
additional revenue associated with the sale of the additional unit of output.
The amount of revenue produced per unit of an output sold is the ______________ revenue.
average
A perfectly competitive firm will incur its total ______________ cost of production when it shuts down temporarily in the short run.
fixed
When the total revenue earned by a firm is less than the total cost of production, the firm faces a ___________________.
loss
The demand for a perfectly competitive firm's product is a horizontal line originating at the ____________.
market price
All firms maximize profits by producing the quantity of output at which the marginal ______________ is equal to the marginal ________________.
revenue; cost
Profit equals the total _________ minus the total ________.
revenue;cost
in the _______________ run, when at least one input is fixed, as the price rises, so does the level of output supplied.
short
The price of a good times the number of units sold gives us:
total revenue
Economic profit equals:
total revenue minus economic costs total revenue minus explicit and implicit costs of production
economic profit equals:
total revenue minus economic costs total revenue minus explicit and implicit costs of production
Normal profit is also known as ___________ economic profit.
zero