Perfect Competition, Revenues, and Profit Max
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Flashcards on Perfect Competition, Revenues, and Profit Max
Last updated 10:33 PM on 6/1/25
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6 Terms
1
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What are the characteristics of perfect competition?
Price takers, large number of firms, homogeneous product, easy entry and exit, good information for both buyers and sellers.
2
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How is total revenue calculated?
Price of output multiplied by the quantity sold.
3
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How is profit calculated?
Total cost subtracted from total revenue.
4
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What is marginal revenue?
The change in total revenue due to a change in quantity sold.
5
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What is the profit maximization rule?
Operate where marginal revenue is equal to marginal cost.
6
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In perfect competition, what is the relationship between price, marginal revenue, and average revenue?
P = MR = AR
Note 
Flashcards (115)