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Representative firm

A single firm whose choices are representative of its industry. Assume all the firms in an industry have the same constant returns to scale technology and every firm acts as a price-taker. In equilibrium each firm must make zero profit and hence is indifferent to the level of output it produces. In contrast, the optimal capital-labour ratio is uniquely defined. The industry can therefore be modelled by a representative firm that has the same technology, chooses the same capital-output ratio, and produces the same output as the entire industry.

Reference: Oxford Press Dictonary of Economics, 5th edt.