EC120 Chapter Notes - Chapter 14: Sunk Costs, Opportunity Cost, Marginal Revenue
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EC120 Full Course Notes
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Document Summary
There are many buyers and many sellers in the market. The goods offered by the various sellers are largely the same. An example is the market for milk, no single buyer of milk can influence the price of milk, and no single seller of milk can change the price because all milk is essentially identical. Because each seller can sell all he wants to at the going price, he has little reason to charge less, and if he charges more, buyers will go elsewhere. Firms can freely enter or exit the market in the long run. A firm in a competitive market, tries to maximize its profits. Any small company must take the price of its market conditions. Average revenue total revenue divided by the quantity sold. Marginal revenue the change in total revenue from an additional unit sold. Profit maximization and the competitive firm"s supply curve. The marginal-cost curve and the firm"s supply decision.
