Econ Chapter 14

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price in competitive market

is the same (ie all $7)
If a firm doubles the output from 3-6 in competitive market,

they make more money
In a competitive market, no single produce can influence the market price because

many other sellers are offering products that are essentially identical (they are price takers)
Total profit for firm formula
- (price minus average cost) multiplied by (quantity of output)
- (P-ATC) X Qs
Short run supply curve for a firm in perfectly competitive market is

the portion of marginal cost curve that lies above the average variable cost
When perfectly competitive firm decides to shut down it is most likely that

price is below the firms average variable cost
Sunk Cost

when a cost as already been committed and it cannot be recovered (ie fixed cost short run)
At profit maximizing level of output

Marginal Revenue = Marginal Cost
Which of the following represents firm's long run condition for exiting the market?

Exit if Price is LESS THAN Average Total Cost
When firms in perfectly competitive market face the same costs in the long run they must be operating at

their efficient scale

Author

273176

Card Set

Econ Chapter 14

Description

econ final chapter 14

Updated

2014-05-05T01:22:39Z

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