ECON 1050 Chapter Notes - Chapter 12: Fixed Cost, Social Cost, Takers

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Arises if the minimum efficient scale of a single producer is small relative to the market demand for a good or service. Consumers don"t care who they buy the product from because they have no unique characteristics. Firms in perfect competition are price takers, a price taker is a firm that cannot influence the market price because its production is an insignificant part of the total market. You take the market price, if you put it below you will be sold out in a flash, and lose money per amount, if you put it above no one will buy. A firms goal is to maximize economic profit which is equal to total revenue minus total cost. Total revenue= the price of its output multiply buy the units of output sold. Marginal revenue= the change in total revenue that results in a one unit increase in the quantity sold. Mr=change in total revenue/ change in quantity sold.

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