Ch14___Perfect_Competition__Handouts_

Ch14___Perfect_Competition__Handouts_ - Perfect Competition...

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Perfect Competition CHAPTER 14 1
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14.0 Market Structure Monopoly Oligopoly Monopolistic Competition Perfect Competition 2
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14.0 Market Structure Monopoly Oligopoly Monopolistic Competition Perfect Competition 3
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14.0 Market Structure Monopoly Oligopoly Monopolistic Competition Perfect Competition 4
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14.0 Market Structure Monopoly Oligopoly Monopolistic Competition Perfect Competition 5
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14.0 Market Structure Monopoly Oligopoly Monopolistic Competition Perfect Competition 6
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C H A P T E R C H E C K L I S T When you have completed your study of this chapter, you will be able to 1 Explain a perfectly competitive firm’s profit-maximizing choices and derive its supply curve. 2 Explain how output, price, and profit are determined in the short run. 3 Explain how output, price, and profit are determined in the long run.
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14.1 A FIRM’S PROFIT-MAXIMIZING CHOICES ± Price Taker A price taker is a firm that 8
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14.1 A FIRM’S PROFIT-MAXIMIZING CHOICES Aguilar Family Dairy Farm (gal ) P(gal.) S $6 D Q (gal. per day) 9
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14.1 A FIRM’S PROFIT-MAXIMIZING CHOICES 14
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14.1 A FIRM’S PROFIT-MAXIMIZING CHOICES 15
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14.1 A FIRM’S PROFIT-MAXIMIZING CHOICES ± Profit Maximization 16
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14.1 A FIRM’S PROFIT-MAXIMIZING CHOICES ± Profit Maximization 17
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14.1 A FIRM’S PROFIT-MAXIMIZING CHOICES ± Profit Maximization 18
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14.1 A FIRM’S PROFIT-MAXIMIZING CHOICES ± Profit Maximization What if MR and MC aren’t exactly equal? 19
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aple Syrup Market 14.1 A FIRM’S PROFIT-MAXIMIZING CHOICES Maple Syrup Market : Total revenue increases as the quantity increases —shown by the TR curve. Total cost increases s the quantity as the quantity increases—shown by the TC curve. As the quantity increases, economic profit ( TR TC) increases, reaches a maximum, and then decreases.
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t low output levels, 14.1 A FIRM’S PROFIT-MAXIMIZING CHOICES At low output levels, the firm incurs an economic loss. hen total revenue When total revenue exceeds total cost, the firm earns an conomic profit economic profit. Profit is maximized when the gap between total revenue and total cost is the largest, at 10 cans per day.
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14.1 A FIRM’S PROFIT-MAXIMIZING CHOICES Marginal revenue is a constant $8 per can.
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14.1 A FIRM’S PROFIT-MAXIMIZING CHOICES Marginal cost decreases at low outputs but then increases.
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14.1 A FIRM’S PROFIT-MAXIMIZING CHOICES Profit is maximized when marginal revenue equals marginal cost at 10 cans a day.
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Ch14___Perfect_Competition__Handouts_ - Perfect Competition...

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