Eco 3 0.0 / 5 ? EconomicsBusinessA2/A-levelEdexcel Created by: Harriet ShepherdCreated on: 02-03-14 15:14 Normal profit TR = TC – the amount needed to keep the firm in that industry in the long run 1 of 8 Supernormal profit TR > TC above that required to keep the firm in the industry in the long run 2 of 8 Marginal profit the profit gaining from producing one additional unit (MP is 0 when MC=MR) 3 of 8 Shut down point AVC = AR 4 of 8 Patent legal right to be the sole supplier of a good or service for a number of years to allow a firm to recoup it spending on R and D through SN profit 5 of 8 Limit pricing when a firm prices just below the AC of a potential new entrant. Requires moving away from Profit Maximisation and is only possible with EoS 6 of 8 Predatory pricing charging a price below AVC in the short run with THE DELIBERATE INTENTION OF forcing the exit of another firm to gain monopoly power in the long run 7 of 8 Innocent barriers to entry – this is a barrier to entry which is due to an absolute cost advantage by the incumbent firm Innocent barriers to entry – this is a barrier to entry which is due to an absolute cost advantage by the incumbent firm 8 of 8
How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts 0.0 / 5
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