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Perfect Competition Cost Curve Collection Slides 2-5 depict a perfectly competitive market and a firm in that market. The progression from slide 2 through.

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Presentation on theme: "Perfect Competition Cost Curve Collection Slides 2-5 depict a perfectly competitive market and a firm in that market. The progression from slide 2 through."— Presentation transcript:

1 Perfect Competition Cost Curve Collection Slides 2-5 depict a perfectly competitive market and a firm in that market. The progression from slide 2 through 4 show the areas of total revenue (TR), total cost (TC), and profit. Slides 6-9 illustrate a decrease in demand and how the new market price reduces TR and causes the firm to operate at a loss. The decrease drives the price below the ATC of the firm, which decreases total revenue and produces a loss for the firm. The firm is covering its variable costs and part of its fixed costs. Slides illustrates a further decrease in demand, reducing the price for the firm to a point below the AVC curve. The slides indicate even greater loss. At this point, the firm will shut down to minimize losses, but it will still be obligated to its fixed costs. Slides could be considered a set. The curves in slides are based on the table in slide 14. The table could be printed so that students would have it handy while viewing the graphs. For best results, print the table in "landscape" orientation.

2 Perfect Competition D=MR MC P S D0D0 P The Industry Q The Firm Price Quantity Q ATC AVC

3 Perfect Competition D=MR MC P S D0D0 P The Industry Q The Firm Price Quantity Q ATC AVC Total Revenue

4 Perfect Competition D=MR MC P S D0D0 P The Industry Q The Firm Price Quantity Q ATC AVC Total Revenue Total Cost

5 Perfect Competition D=MR MC P S D0D0 P The Industry Q The Firm Price Quantity Q ATC AVC Total Revenue Total CostProfit

6 Perfect Competition MC S D0D0 The IndustryThe Firm Price Quantity Q ATC AVC D1D1 Q1Q1 Q0Q0 P1P1 P0P0 P D=MR

7 Perfect Competition MC S D0D0 The IndustryThe Firm Price Quantity Q ATC AVC D1D1 Q1Q1 Q0Q0 P1P1 P0P0 P Total Revenue D=MR

8 Perfect Competition MC S D0D0 The IndustryThe Firm Price Quantity Q ATC AVC D1D1 Q1Q1 Q0Q0 P1P1 P0P0 P Total Revenue Total Cost D=MR

9 Perfect Competition MC S D0D0 The IndustryThe Firm Price Quantity Q ATC AVC D1D1 Q1Q1 Q0Q0 P1P1 P0P0 P Total Revenue Total CostLoss D=MR

10 Perfect Competition D=MR MC S D0D0 The IndustryThe Firm Price Quantity Q ATC AVC D1D1 Q1Q1 Q0Q0 P1P1 P0P0 P

11 Perfect Competition MC S D0D0 The IndustryThe Firm Price Quantity Q ATC AVC D1D1 Q1Q1 Q0Q0 P1P1 P0P0 P Total Revenue D=MR

12 Perfect Competition MC S D0D0 The IndustryThe Firm Price Quantity Q ATC AVC D1D1 Q1Q1 Q0Q0 P1P1 P0P0 P Total Revenue Total Cost D=MR

13 Perfect Competition MC S D0D0 The IndustryThe Firm Price Quantity Q ATC AVC D1D1 Q1Q1 Q0Q0 P1P1 P0P0 P Total Revenue Total Cost D=MR Loss

14 Perfect Competition Quantity of chairs per hour TCFCVCMCAFCAVCATC

15 Perfect Competition Costs in $s Quantity (chairs per hour)

16 Perfect Competition TC TC=Total Cost Costs in $s Quantity (chairs per hour)

17 Perfect Competition TC TC=Total Cost Costs in $s Quantity (chairs per hour)

18 Perfect Competition FC TC FC=Fixed Cost TC=Total Cost Costs in $s Quantity (chairs per hour)

19 Perfect Competition FC TC FC=Fixed Cost TC=Total Cost Costs in $s Quantity (chairs per hour)

20 Perfect Competition FC VC TC FC=Fixed Cost VC=Variable Cost TC=Total Cost Costs in $s Quantity (chairs per hour)

21 Perfect Competition FC VC TC FC=Fixed Cost VC=Variable Cost TC=Total Cost Costs in $s Quantity (chairs per hour)

22 Perfect Competition Costs in $s Quantity (chairs per hour)

23 Perfect Competition MC MC=Marginal Cost Costs in $s Quantity (chairs per hour)

24 Perfect Competition MC MC=Marginal Cost Costs in $s Quantity (chairs per hour)

25 Perfect Competition AFC MC AFC=Average Fixed Cost MC=Marginal Cost Costs in $s Quantity (chairs per hour)

26 Perfect Competition AFC MC AFC=Average Fixed Cost MC=Marginal Cost Costs in $s Quantity (chairs per hour)

27 Perfect Competition AFC AVC MC AFC=Average Fixed Cost AVC=Average Variable Cost MC=Marginal Cost Costs in $s Quantity (chairs per hour)

28 Perfect Competition AFC AVC MC AFC=Average Fixed Cost AVC=Average Variable Cost MC=Marginal Cost Costs in $s Quantity (chairs per hour)

29 Perfect Competition AFC AVC ATC MC AFC=Average Fixed Cost AVC=Average Variable Cost ATC=Average Total Cost MC=Marginal Cost Costs in $s Quantity (chairs per hour)

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