Perfect Competition (Revision Quizlet Activity)

Here is a selection of key terms linked to perfect competition as a market structure together with two quizlet revision activities.

Key Terms to Revise

Allocative efficiency: Achieved when price = marginal cost of supply

Free entry and exit: No barriers to joining or leaving a market

Frictionless trade: Buyers and sellers do not incur transactions costs when making an exchange of products

Homogenous products: Standardised goods that are perfect substitutes for each other

Market supply curve: Graph of quantity supplied by all producers at each price

Normal profit: Profit achieved in long run equilibrium where price = average cost

Perfect knowledge: All consumers fully aware of price and other relevant information in a market

Perfectly elastic demand: Average revenue curve for a perfectly competitive firm

Price-takers: Firms accept the ruling market price

Productive efficiency: Achieved when short or long run average cost is minimised

Profit max output: Where marginal revenue = marginal cost

Shut down price: Price where average revenue is equal to minimum of average variable cost

Subnormal profit: When price (AR) < AC, also known as an economic loss

Supernormal profit: Profit above normal profit - also known as abnormal profit