sellers who must take the market price in order to sell their product. Because each price taker's output is small relative to the total market, price takers can sell all their output at the market price, but they are unable to sell any of their output at the market price, but they are unable to sell any of their output at a price higher than the market price.
firms that face a downward sloping demand curve for their product. The amount the firm is able to sell is inversely related to the price it charges.
barriers to entry
obstacles that limit the freedom of potential rivals to enter and compete in an industry or market.
the incremental change in total revenue dervied from the sale of one additional unit of a product.
a temporary halt in the operation of a firm. Because the firm anticipates operating in the future, it does not sell its assets and go out of business. The firm's variable cost is eliminated by the shutdown, but its fixed costs continue.
going out of business
the sale of a firm's assers and its permanent exit from the market. By going out of business, a firm is able to avoid its fixed costs, which would continue during a shutdown.
an industry for which factor prices and costs of production remain constant as market output is expanded. The long-run market suppply curve is therefore horizontal in these industries.
an industry for which costs of production rise as output is expanded. In these industries, evenin the long run, higher market prices will be needed to induce firms to expand total output. As a result, the long-run market supply curve inthese industries will slope upward and to the right (positive)
an industry for which costs of production decline as the industry expands. The market supply is therefore inversely related to price. Such industries are atypical.