7.6 KEY TERMS

image | interactive activity

Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.

Question

Price-taking producer
Price-taking consumer
Perfectly competitive market
Perfectly competitive industry
Market share
Standardized product
Commodity
Free entry and exit
Marginal benefit
Principle of marginal analysis
Marginal revenue
Optimal output rule
Price-taking firm’s optimal output rule
Marginal revenue curve
Economic profit
Explicit cost
Implicit cost
Accounting profit
Break-even price
Shut-down price
Sunk cost
Short-run individual supply curve
Industry supply curve
Short-run industry supply curve
Short-run market equilibrium
Long-run market equilibrium
Long-run industry supply curve
output of different producers regarded by consumers as the same good; also referred to as a standardized product.
describes an industry that potential producers can easily enter or current producers can easily leave.
a cost that has already been incurred and is not recoverable.
the fraction of the total industry output accounted for by a given producer’s output.
a cost that involves actually laying out money.
a graphical representation that shows how quantity supplied responds to price once producers have had time to enter or exit the industry.
the change in total revenue generated by an additional unit of output.
the price at which a firm ceases production in the short run because the market price has fallen below the minimum average variable cost.
a business’s revenue minus the opportunity cost of resources; usually less than the accounting profit.
a business’s revenue minus the explicit cost and depreciation; usually larger than economic profit.
the additional benefit derived from producing one more unit of a good or service.
a graphical representation that shows the relationship between the price of a good and the total output of the industry for that good.
an economic balance that results when the quantity supplied equals the quantity demanded, taking the number of producers as given.
the profit of a price-taking firm is maximized by producing the quantity of output at which the market price is equal to the marginal cost of the last unit produced.
a graphical representation that shows how an individual producer’s profit-maximizing output quantity depends on the market price, taking fixed cost as given.
a cost that does not require the outlay of money; it is measured by the value, in dollar terms, of forgone benefits.
a consumer whose actions have no effect on the market price of the good or service he or she buys.
profit is maximized by producing the quantity of output at which the marginal revenue of the last unit produced is equal to its marginal cost.
a graphical representation that shows how the quantity supplied by an industry depends on the market price, given a fixed number of producers.
an economic balance in which, given sufficient time for producers to enter or exit an industry, the quantity supplied equals the quantity demanded.
an industry in which all producers are price-takers.
the market price at which a firm earns zero profits.
a graphical representation showing how marginal revenue varies as output varies.
output of different producers regarded by consumers as the same good; also referred to as a commodity.
a producer whose actions have no effect on the market price of the good or service it sells.
a market in which all participants are price-takers.
the proposition that the optimal quantity is the quantity at which marginal benefit is equal to marginal cost.