3.15.10 – Lecture Notes, Econ 201

3.15.10 – Lecture Notes, Econ 201 - SHOULD...

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3.15.10 – Lecture Notes, Econ 201 HOW TO MEASURE PROFIT? TR – TC = Profit TR/Q – TC/Q = Profit/Q P – AC = Profit/Q ($7 - $5.05 = $1.95/Bushel) TOTAL PROFIT (Profit/Q) x (Q) = Profit $1.95 x 35,000 = $68,250 MR = MC gives you the biggest rectangle for total profit. WHAT IF NO PRODFIT? AC > P = Negative = Loss If your MR Always worry about your variable costs in the short run.
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Unformatted text preview: SHOULD THE FIRM SHUT DOWN IN THE SHORT RUN? If P>AVC NO If P<AVC YES GREEN ATC YELLOW AVC RED WHAT IS THE SUPPLY CURVE OF A FIRM? The supply curve is the MC curve. Only PART of MC curve, what is ABOVE the AVC curve. If 2 firms in the industry the Supply curve is the aggregation (Summation) of the two MC curves...
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