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LONG-RUN EQUILIBRIUM, MONOPOLISTIC COMPETITION: Relative freedom of entry and exit ensures that, in the long run, every firm in a monopolistically competitive industry earns exactly a normal profit, receiving neither an economic profit, nor incurring an economic loss. This result is achieved because entry and exit affects the market supply curve, which affects the overall market price, each firm's demand curve, and the range or prices it can charge. Each firm's demand curve adjusts until the profit-maximizing price is exactly equal to average total cost (both short run and long run).
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COMPARATIVE ADVANTAGE The ability to produce one good at a relatively lower opportunity cost than other goods, especially compared to production in another country. Every person or country has a comparative advantage in production of at least one good or service, even with relatively limited production technology. A related, but contrasting concept is absolute advantage. Both terms are perhaps most important to the study of international trade, but also provide insight into other exchanges.
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Lewis Carroll, the author of Alice in Wonderland, was the pseudonym of Charles Dodgson, an accomplished mathematician and economist.
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"I have no expectation of making a hit every time I come to bat. What I seek is the highest possible batting average." -- President Franklin Delano Roosevelt
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FASB
Financial Accounting Standards Board
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