23254092
Description
Flashcards by Sophia Lynch, updated more than 1 year ago
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Created by Sophia Lynch
over 4 years ago
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| Question | Answer |
| What does the green box symbolise? | Profit/Super-normal Profit (in the short-run) |
| What type of profit is being made is this scenario? | Normal Profit/Zero Economic Profit (It doesn't necessarily encourage people to leave or enter this industry) |
| What does this green box symbolise? | A loss/Negative Economic Profits |
| What should the business do if price was = to or less than AVC? | The business should stop operating. |
| The Marginal Cost Curve (MC) is the.... | Short-run supply curve for the firm. |
| What is the short-run shut-down rule? | Only operate if average revenue (AR) is > than or = to average variable cost (AVC) AR > = AVC |
| What does it mean when AR = ATC? | There is normal profit. |
| What does it mean P = MC? | There is economic efficiency hence there is no DWL. |
| CM: After super-normal profit has occurred, firms will continue to enter the market until... | P = AR = MR = MC = AC This means that in the long-run, in competitive markets, only normal profit can be made. |
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