Chapter 8 - Perfect Competition

Voluntary exchange

________ optimizes the total consumer surplus and producer surplus in competitive marketplaces, therefore maximizing societal welfare.

economic profit

The company optimizes ________ by determining the level at which total revenue surpasses total cost by the largest margin.

Perfectly competitive markets

________ display both productive efficiency (since the output is generated using the most efficient combination of available resources) and allocative efficiency (because the commodities produced are those that customers value the most)

profit maximizer

As a(n) ________, the farmer restricts output to 12 bushels each day.

Market pressure

________ reduces the average cost of manufacturing in the long run.

Perfectly competitive markets

________ display both productive efficiency (since the output is generated using the most efficient combination of available resources) and allocative efficiency (because the commodities produced are those that customers value the most)

Commodity

standardized product, a product that does not differ across producers, such as bushels of wheat or an ounce of gold