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Unformatted text preview: P<ATC Ch. 1-8, 13, 14 Bring normal calculator, ID, scantron, pencil SR: P=MR=MC Only produce if and only if P>=AVC, otherwise shut down LR: P=MR=MC Produce if and only if P>=ATC, otherwise exit When pi>0, firms will enter in the LR price falls LR Equilibrium: pi = 0 • If all firms have identical cost curves, profit = 0 for all firms • If the cost structures vary, then only the marginal firm has profit = 0...
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- Spring '09
- Economics, shut down, average variable cost, Variable Costs TR/Q