question
break even point
answer
level of output where the marginal cost curve intersects the average cost curve at the minimum point of AC; if the price is at this point, the firm is earning zero economic profits.
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entry
answer
the long-run process of firms entering an industry in response to industry profits
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exit
answer
the long-run process of firms reducing production and shutting down in response to industry losses
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long run equilibrium
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where all firms earn zero economic profits producing the output level where P = MR = MC and P = AC
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marginal revenue
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the additional revenue gained from selling one more unit
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market structure
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the conditions in an industry, such as number of sellers, how easy or difficult it is for a new firm to enter, and the type of products that are sold
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perfect competition
answer
each firm faces many competitors that sell identical products
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price taker
answer
a firm in a perfectly competitive market that must take the prevailing market price as given
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shutdown point
answer
level of output where the marginal cost curve intersects the average variable cost curve at the minimum point of AVC; if the price is below this point, the firm should shut down immediately
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