{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Econ 102 notes 4-20-09

Econ 102 notes 4-20-09 - At the profit-maximizing level of...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ 102 Chapter 14 Week of 4/20/09 Firms in Competitive Markets Competitive Market= A market with many buyers and sellers trading identical products so that each buyer and seller is a price taker A.k.a. a perfectly competitive market Firms can freely enter or exit the market. Buyers are price takers Average revenue= total revenue / quantity sold Average revenue equals the price of the good. Marginal revenue= the change in total revenue from an additional unit sold. Marginal-cost curve is upward sloping Average-total-cost curve is U-shaped Price takers have horizontal lines: no matter what the output, price remains the same. If marginal revenue is greater than marginal cost, the firm should increase its output If marginal revenue is less than marginal cost, the firm should decrease its output
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: At the profit-maximizing level of output, marginal revenue equals marginal cost Shutdown= a short-run decision not to produce anything b/c of market conditions Exit= a long-run decision to leave the market Sunk cost= a cost that has already been committed and cannot be recovered I.e. the last 2 years I’ve spent at college, b/c I can’t get those back (theoretically) REMEMBER: ECONOMIC PROFIT IS DIFFERENT FROM ACCOUNTING PROFIT Marginal Firm= the firm that would exit the market if the price were any lower. Because firms can enter and exit more easily in the long run than in the short run, the long-run supply curve is typically more elastic than the short-run supply curve. VC= AVC x Q...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern