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 Pure Competition | most competitive many buyers and sellers no barriers to entry absense of product differentiation lack of non price comp. (agriculture) PRICE TAKER |
| MR = MC Rule | principle that a firm will maximize its profit by producing the output at which marginal revenue and marginal cost are equal |
| Price Taker | A firms that accepts market price as a given and has no ability to influence price. Firms operating in perfect competition are price takers. |
| Consumer Surplus | the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it |
| Producer Surplus | the difference between the lowest price a firm would be willing to accept and the price it actually receives |
| Increasing Cost Industry | An industry that faces higher per-unit production costs as industry output expands in the long run; the long-run industry supply curve slopes upward |
| Decreasing Cost Industry | An industry in which average total costs decrease as output increases and increases as output decreases when firms enter and exit the industry. |
| Marginal Revenue | the additional income from selling one more unit of a good; sometimes equal to price |
| Total Revenue | the total amount of funds received by a seller of a good or service, calculated by multiplying price per unit by the number of units sold. |
| Break Even Point | point at which total revenue and total cost are equal |
| Productive Efficiency | The production of a good in the least costly way; occurs when production takes place at the output at which average total cost is at a minimum. |
| Allocative Efficiency | Obtains the production of the products most wanted by society (consumers); the output of each product at which its marginal cost and price (or marginal benefit) are equal |