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PERFECT COMPETITION AND DEMAND: The demand curve for the output produced by a perfectly competitive firm is perfectly elastic at the going market price. The firm can sell all of the output that it wants at this price because it is a relatively small part of the market. As a price taker, the firm has no ability to charge a higher price and no reason to charge a lower one. The market price facing a perfectly competitive firm is also the firm's average revenue and, most importantly, its marginal revenue.
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AVERAGE FACTOR COST: Total factor cost per unit of factor input, found by dividing total factor cost by the quantity of factor input. Average factor cost, abbreviated AFC, is essentially the factor price. However, using the longer term average factor cost let's us see the connection with other terms, like total factor cost and marginal factor cost. See also | total factor cost | factor price | marginal factor cost | factor markets | perfect competition | monopsony | market control | average cost | law of diminishing marginal returns |
Recommended Citation:AVERAGE FACTOR COST, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: July 18, 2025].
AmosWEB Encyclonomic WEB*pedia:Additional information on this term can be found at: WEB*pedia: average factor cost
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PERFECT COMPETITION, LONG-RUN PRODUCTION ANALYSIS In the long run, a perfectly competitive firm adjusts plant size, or the quantity of capital, to maximize long-run profit. In addition, the entry and exit of firms into and out of a perfectly competitive market guarantees that each perfectly competitive firm earns nothing more or less than a normal profit. As a perfectly competitive industry reacts to changes in demand, it traces out positive, negative, or horizontal long-run supply curve due to increasing, decreasing, or constant cost.
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The average length of a "business lunch" is about 36 minutes.
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"A winner is someone who recognizes his God-given talents, works his tail off to develop them into skills, and uses those skills to accomplish his goals. " -- Larry Bird, basketball player
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FASB
Financial Accounting Standards Board
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