Perfectly Competitive Markets

price is greater than the shutdown price

revenue compensates the owners for the time and money they expend to keep the business going

the portion of its marginal cost curve that lies above average variable cost

<p>the marginal cost curve above the minimum point of its average total cost curve</p> Signup and view all the answers

<p>total revenue it would get from producing is less than its total cost</p> Signup and view all the answers

<p>$P = MC$</p> Signup and view all the answers

<p>total revenue minus total cost (including both explicit and implicit costs)</p> Signup and view all the answers

<p>the firm’s total revenue minus only explicit costs</p> Signup and view all the answers

<p>market price equals average variable cost</p> Signup and view all the answers

<p>firms are operating at their efficient scale (minimum point of ATC)</p> Signup and view all the answers

<p>change in total revenue generated by an additional unit of output. MR = $rac{ riangle TR}{ riangle Q}$</p> Signup and view all the answers

<p>It is standardised across sellers</p> Signup and view all the answers

<p>Small, with each participant having a negligible impact on market price</p> Signup and view all the answers

<p>New producers can easily enter into an industry and existing producers can easily leave that industry</p> Signup and view all the answers

<p>$MR = MC$</p> Signup and view all the answers

<p>$TR = P \times Q$</p> Signup and view all the answers

<p>Economic profit, which includes implicit costs</p> Signup and view all the answers

<p>It increases proportionally with quantity sold.</p> Signup and view all the answers

<p>No individual firm can influence market price.</p> Signup and view all the answers

<p>There is high degree of information available to buyers and sellers in the market.</p> Signup and view all the answers

<p>Firms accept the equilibrium price set by the market.</p> Signup and view all the answers

<p>Firms cannot influence the market price and must accept the prevailing market price</p> Signup and view all the answers

<p>Individual firms have no influence on market price</p> Signup and view all the answers

<p>$TR = P \times Q$</p> Signup and view all the answers

<p>New producers can easily enter the industry and existing producers can easily leave</p> Signup and view all the answers

<p>Economic profit</p> Signup and view all the answers

<p>'Homogenous' or standardized product</p> Signup and view all the answers

<p>Their total revenue increases proportionally with quantity sold</p> Signup and view all the answers

<p>It is perfectly elastic at the minimum average total cost (ATC)</p> Signup and view all the answers

<p>They each have a small market share and are considered price-takers</p> Signup and view all the answers

<p>Production decisions are made based on market demand and cost considerations</p> Signup and view all the answers

<p>Marginal revenue is equal to market price</p> Signup and view all the answers

<p>Where marginal revenue equals marginal cost</p> Signup and view all the answers

<p>Total revenue increases at a decreasing rate</p> Signup and view all the answers

<p>The marginal cost curve above the minimum point of its average total cost curve</p> Signup and view all the answers

<p>Firms accept the market price as given and do not have influence over it</p> Signup and view all the answers

<p>Firms independently decide on production levels based on their own profit-maximizing objectives</p> Signup and view all the answers

<p>New firms can freely enter the industry and existing firms can leave if they desire without restriction</p> Signup and view all the answers

<p>Economic profit, which includes both explicit and implicit costs</p> Signup and view all the answers

<p>It is an inverse relationship</p> Signup and view all the answers