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SHORT-RUN SUPPLY CURVE: For a perfectly competitive firm, the marginal cost curve that lies above the average variable cost curve. This segment of the marginal cost guides a perfectly competitive firm's profit maximizing production as it equates price to marginal cost. Because the marginal cost curve is positively sloped (due to the law of diminishing marginal returns), each firm's supply curve and the market supply curve are also positively sloped. The law of diminishing marginal returns thus provides an explanation for the law of supply. However, this only works for firms with NO market control. Monopoly, monopolistic competition, and oligopoly, with market control, do not achieve the same result.
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PERFECT COMPETITION, DEMAND The demand curve for the output produced by a perfectly competitive firm is perfectly elastic at the going market price. The firm can sell all of the output that it wants at this price because it is a relatively small part of the market. As a price taker, the firm has no ability to charge a higher price and no reason to charge a lower one. The market price facing a perfectly competitive firm is also average revenue and, most important, marginal revenue.
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GRAY SKITTERY
[What's This?]
Today, you are likely to spend a great deal of time at a crowded estate auction trying to buy either a pair of designer sunglasses or looseleaf notebook paper. Be on the lookout for florescent light bulbs that hum folk songs from the sixties.
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This isn't me! What am I?
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General Electric is the only stock from the original 1896 Dow Jones Industrial Average remaining in the current index.
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"Success is the ability to go from one failure to another with no loss of enthusiasm." -- Sir Winston Churchill
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IEBNR
Income Earned But Not Received
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