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Important thigns in chap 15 and 14 colander
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Perfectly competitive market
a market in which economic forces operate unimpeded
6 conditions for perfectly competitive market to exist
both buyers and sellers are price takers
the number of firms is large
there are no barriers to entry
firms products are identical
there is complete information
selling firms are profit-maximizing entrepreneurial firms
marginal revenue
the change in total revenue associated with a change in quantity
marginal cost (MC)
the change in total cost associated with change in quantity
the profit maximizing condition of a competitive firm is
MR = MC
for a competitive firm MR =
price P
if MR > MC
a firm can increase profit by increasing output
if MR< MC
a firm can increase profit by decreasing its output
Monoply
a market structure in which one firm makes up the entier market
key differs between monopolist andperfect competitior
a monoplistic firms marginal revneu is not its price
MR is always < price
MR changes as output changes, is not equal to price
Marginal revenue MR
is the change in total revenue associated with a chang ein quantity
Marginal cost MC
is the change in total cost associated with a change in quantity
the profit-maximizing condition of a monopolistic firm is
MR = MC
for monoplist if MR >MC
the monoply can increase profit by increasing output
the monoply can increase profit by decreasing its output if
MR < MC
Author
ndumas2
ID
73974
Card Set
Important thigns in chap 15 and 14 colander
Description
terms and formulas from pwpt
Updated
2011-03-20T06:31:15Z
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