Ch. 13 Key Terms
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9 Terms
barriers to entry
social, political, or economic impediments that prevent firms from entering a market
marginal cost (MC)
the change in total cost associated with a change in quantity
marginal revenue (MR)
the change in total revenue associated with a change in quantity
market supply curve
the horizontal sum of all the firms’ marginal cost curves, taking account of any changes in input prices that might occur
normal profit
the amount the owners of a business would have received in the next-best alternative
perfectly competitive market
a market in which economic forces operate unimpeded
price taker
a firm or individual who takes the price determined by market supply and demand as given
profit-maximizing condition
MC = MR = P. So, if MR ＞MC, increase production; if MR＜MC, decrease production. If MR = MC, the firm is maximizing profit.
shutdown point
that point below which the firm will be better off if it temporarily shuts down than it will if it stays in business