Chapter 12: Competition and the Invisible Hand
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4 Terms
1
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What does price equal
Marginal Cost P=MC
2
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Elimination principle
Above-normal profits are eliminated by entry, and below-normal profits are eliminated by exit
EX: When a company stops producing a item because it is not profitable
3
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Creative destruction
Resources move toward an increase in the value of production
EX: The rise of the car led to the decrease in horse sales
4
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In a competitive market with N markets what does the p=mc look like
P= MC1, MC2, MC3……..MCN
Note 
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