7.5: Key Terms
- Page ID
- 215639
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- Break-Even Point
- The level of output where the marginal cost curve intersects the average cost curve at the minimum point of average cost; at this point, the firm earns zero economic profit.
- Entry
- The long-run process of firms entering an industry in response to industry profits.
- Exit
- The long-run process of firms reducing production and shutting down in response to industry losses.
- Long-Run Equilibrium
- The situation where firms earn zero economic profits and produce where P = MR = MC and P = AC.
- Marginal Revenue
- The additional revenue gained from selling one more unit.
- Market Structure
- The conditions in an industry, including the number of sellers, ease of entry, and type of products sold.
- Perfect Competition
- A market structure in which many firms sell identical products.
- Price Taker
- A firm in a perfectly competitive market that must accept the prevailing market price.
- Shutdown Point
- The level of output where the marginal cost curve intersects the average variable cost curve at the minimum point of AVC; below this price, the firm should shut down.