ECON 208 Chapter Notes -Price Discrimination, Longrun, Marginal Revenue
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ECON 208 Full Course Notes
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Competitive behaviour: refers to the degree to which individual firms actively vie with one another for business. A market structure in which all firms in an industry are price takers and in which there is freedom of entry into and exit from the industry: all firms sell a homogenous product. Price taker: a firm that can alter its rate of production and sales without affecting the market price of its product. The demand curve for a perfectly competitive firm. The demand curve for the entire industry is negatively-sloped. However each individual firm faces a horizontal demand curve because variations in the firm"s output have no effect on price. This does not mean that the firm could actually sell an infinite amount at the market price: normal variations in the firm"s level of output have a negligible effect on total industry output. Total revenue: total receipts from the sale of a product (tr) = p q.
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