break even point level of output where the marginal cost curve intersects the average cost curve at the

minimum point of AC; if the price is at this point, the firm is earning zero economic profits

entry the long-run process of firms entering an industry in response to industry profits

exit the long-run process of firms reducing production and shutting down in response to industry losses

long-run equilibrium where all firms earn zero economic profits producing the output level where P = MR =

MC and P = AC

marginal revenue the additional revenue gained from selling one more unit

market structure the conditions in an industry, such as number of sellers, how easy or difficult it is for a new

firm to enter, and the type of products that are sold

perfect competition each firm faces many competitors that sell identical products

price taker a firm in a perfectly competitive market that must take the prevailing market price as given
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