This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: The vertical line eQ intersects the cost curve at point S which determines average cost of producing output Q. The total cost that the firm has to bear in producing output Q units is equal to the area OQSC. The difference between total revenue and total cost shows extra profits that the firm earns. These are equal to the area CSeP. Profits TR - TC = OQeP -OQSC = CSeP Under monopolistic competition the conditions that matter are the demand curve and the average revenue of the firm. Any reference to marginal revenue and marginal cost is not necessary for such equilibrium....
View Full Document
This note was uploaded on 11/26/2011 for the course ECONOMIC ec 201 taught by Professor - during the Fall '10 term at Montgomery.
- Fall '10