ECO206 Chapter 13 - Perfect Competition
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8 Terms
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
barriers to entry
social, political, or economic impediments that prevent firms from entering a market
marginal revenue
the change in total revenue associated with a change in quantity
marginal cost
the change in total cost associated with a change in quantity
profit-maximizing condition
states that MR (marginal revenue) = MC (marginal cost) =P (price)
shutdown point
the point below which the firm will be better off if it temporarily shuts down than it will if it stays in business
normal profit
the amount the owners of a business would have received in the next-best alternative
