Econ Chapter 14

  1. price in competitive market
    is the same (ie all $7)
  2. If a firm doubles the output from 3-6 in competitive market,
    they make more money
  3. In a competitive market, no single produce can influence the market price because
    many other sellers are offering products that are essentially identical (they are price takers)
  4. Total profit for firm formula
    • (price minus average cost) multiplied by (quantity of output)
    • (P-ATC) X Qs
  5. Short run supply curve for a firm in perfectly competitive market is
    the portion of marginal cost curve that lies above the average variable cost
  6. When perfectly competitive firm decides to shut down it is most likely that
    price is below the firms average variable cost
  7. Sunk Cost
    when a cost as already been committed and it cannot be recovered (ie fixed cost short run)
  8. At profit maximizing level of output
    Marginal Revenue = Marginal Cost
  9. Which of the following represents firm's long run condition for exiting the market?
    Exit if Price is LESS THAN Average Total Cost
  10. When firms in perfectly competitive market face the same costs in the long run they must be operating at
    their efficient scale
Card Set
Econ Chapter 14
econ final chapter 14