Tuesday, June 16, y Chapter 14 - Firms in Competitive Markets Econ 10 14-1 What Is a Competitive Market? 14-1b The Revenue of a Competitive Firm - total revenue is proportional to the amount of output because firms do not affect price and TR=PxQ - average revenue - total revenue divided by the quantity sold - for all types of firms, average revenue equals the price of the good - marginal revenue - the change in total revenue from an additional unit sold - for competitive firms, the marginal revenue equals the price of the good 14-2 Profit Maximization and the Competitive Firm’s Supply Curve 14-2a A Simple Example of Profit Maximization - firms can find the profit-maximizing quantity by comparing the marginal revenue and marginal cost from each unit produced - if marginal revenue exceeds marginal cost, increasing the quantity produced raises profits 14-2b The Marginal-Cost Curve and the Firm’s Supply Decision -
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- Fall '11
- Economics, Firm, Competitive Firm