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Micro Ch 8
Stack based on Chapter 8 of Principles of Microeconomics 3e
| Term | Definition |
|---|---|
| break even point | level of output where the marginal cost curve intersects the average cost curve at the minimum point of AC; if the price is at this point, the firm is earning zero economic profits |
| entry | the long-run process of firms entering an industry in response to industry profits |
| exit | the long-run process of firms reducing production and shutting down in response to industry losses |
| long-run equilibrium | where all firms earn zero economic profits producing the output level where P = MR = MC and P = AC |
| marginal revenue | the additional revenue gained from selling one more unit |
| market structure | the conditions in an industry, such as number of sellers, how easy or difficult it is for a new firm to enter, and the type of products that are sold |
| perfect competition | each firm faces many competitors that sell identical products |
| price taker | a firm in a perfectly competitive market that must take the prevailing market price as given |
| shutdown point | level of output where the marginal cost curve intersects the average variable cost curve at the minimum point of AVC; if the price is below this point, the firm should shut down immediately |
Created by:
CheriseSLCC
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