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Perfect competition
market structure that exists when (1) firms r price-takers, (2) all firms produce a homogeneous product, and (3) entry n exit r unrestricted
Perfectly elastic demand
hor demand facing a single, price-taking firm in a competitive market (abs(E) = infinity)
Shut down
firm produces 0 output in the SR but must still pay for fixed inputs
Profit margin
diff bw price n avf total cost: P - ATC
Average profit
total profit divided by quantity
Measures profit per unit n is equivalent to profit margin when all units sell for the same price
Break-even points
Output levels where P = ATC n profit equals 0
Shutdown price
price below which a firm shuts down in the short run (minimum AVC)
LR competitive equilibrium
condition i/w all firms r producing where P = LMC n economic profits r 0 (P = LAC)
Increasing-cost industry
industry i/w input prices rise as all firms in the industry expand output
Constant-cost industry
industry i/w input prices remain constant as all firms in the industry expand output
Economic rent
payment to a resource in excess of the resource's opportunity cost
Marginal revenue product (MRP)
additional rev earned when the firm hires 1 more unit of the input (MRP = change in TR/change in I)
Average revenue product (ARP)
avg rev per worker (ARP = TR/L)
