Unit 3: Costs of Production and Perfect Competition

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Presentation transcript:

Unit 3: Costs of Production and Perfect Competition Copyright ACDC Leadership 2015

Drawing side-by-side graph for perfectly completive industry and firm Is the firm making a profit or a loss? Why? P S P MC ATC MR=D $15 $15 D Q 5000 8 Q Firm (price taker) Industry 2 Copyright ACDC Leadership 2015

Which of the following is a correctly labeled graph for firm making economic profit? 3 Copyright ACDC Leadership 2015

#1 #3 #2 #4 ATC MC MC ATC PF MR=D MR=D Q Q QF QF MC ATC ATC MC MR=D Copyright ACDC Leadership 2015

Where is the profit maximization point? How do you know? What output should be produced? What is TR? What is TC? How much is the profit or loss? Where is the Shutdown Point? $25 20 15 10 MC MR=P ATC Cost and Revenue AVC 1 2 3 4 5 6 7 8 9 10 Copyright ACDC Leadership 2015