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  • TC TFC + TVC Atc Afc + Avc Atc TC / Q Afc TFC / Q Avc TVC / Q MC Change in TC Change in Q

    Transféré par

    MJ Botor
    43 vues1 page
    Firms in competitive and monopolistically competitive markets are expected to break even in the long run, while firms in oligopoly and monopoly markets can earn positive profits. Costs include total fixed costs, total variable costs, average fixed costs, average variable costs, average total costs, and marginal costs. Firms will shut down temporarily if price is below average variable cost, and will produce the quantity where marginal revenue equals marginal cost if price is above average variable cost.

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    Summary.

    Titre original

    Market

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    Firms in competitive and monopolistically competitive markets are expected to break even in the long run, while firms in oligopoly and monopoly markets can earn positive profits. Costs include total fixed costs, total variable costs, average fixed costs, average variable costs, average total costs, and marginal costs. Firms will shut down temporarily if price is below average variable cost, and will produce the quantity where marginal revenue equals marginal cost if price is above average variable cost.

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    © All Rights Reserved
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    43 vues1 page

    TC TFC + TVC Atc Afc + Avc Atc TC / Q Afc TFC / Q Avc TVC / Q MC Change in TC Change in Q

    Transféré par

    MJ Botor
    Firms in competitive and monopolistically competitive markets are expected to break even in the long run, while firms in oligopoly and monopoly markets can earn positive profits. Costs include total fixed costs, total variable costs, average fixed costs, average variable costs, average total costs, and marginal costs. Firms will shut down temporarily if price is below average variable cost, and will produce the quantity where marginal revenue equals marginal cost if price is above average variable cost.

    Droits d'auteur :

    © All Rights Reserved
    Téléchargez comme DOCX, PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    sur 1

    III.

    Recap of Firm’s Profits


    A. Costs
    We would expect that firms in competitive and monopolistically competitive market would break even
    in the long run.

    We would expect that firms in oligopoly or monopoly market would earn positive profits in the long run.

    TC = TFC + TVC
    B. Revenue
    cost per
    TR = P x Q
    ATC = AFC + AVC input
    MR = change in TR
    ATC = TC /Q
    change in Q
    Marginal
    AFC = TFC / Q
    Average Revenue = TR / Q
    Cost
    AVC = TVC / Q =PxQ / Q
    Average Tot
    MC = change in TC = P
    change in Q
    C. Shut Down and Break Even Average Variable Cos
    If P < AVC, then temporarily shut down.

    loss equal to fixed cost

    If P > AVC, the produce the quantity where MR = MC.

    If P < ATC, earn a loss. (exit in the long run)

    If P = ATC, break even.


    output
    If P > ATC, earn a profit. (firms will enter if there are no
    barriers)

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