ECON 2000 Chapter : Econ Chapter 8
Document Summary
Economic total total economic profit = revenue - cost. Chapter 08 - the competitive firm: normal profit- the opportunity cost of capital; zero economic profit, economic profits represent something over and above. An example would be credit card companies: monopolistic competition-enough firms to ensure some competition, but not so many as to preclude some limited monopoly- type power. An example will be like fast food restaurants. Market structure (figure 8. 1: structure, a perfectly competitive industry has multiple characteristics, many firms- lots of firms are competing for consumer purchases. The demand curve confronting a perfectly competitive firm is horizontal. Once a firm starts producing output, it incurs variable costs as well: total costs increase as output expands. Profit-maximizing rule: one of the best rules for getting the best profit in the short run is never produce a unit of output that costs more than it brings in.
