microbook_3e-page108

# microbook_3e-page108 - curve (which corresponds to the...

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Short-Run Average and Marginal Cost To find Short-Run Average Cost simply divide by Total Cost by X: AVC AFC AC 2 2 K X w X rK AC X TC AC . . ¡ To find Short-Run Marginal Cost take the derivative of Total Cost with respect to X: 2 2 K X 3w MC X d TC d MC ¡ { So if the wage and rental rate are both equal to \$1 and the capital stock is equal to 10 units, then: w = \$1 r = \$1 K =10 Output: Revenues, Costs and Profit Maximization x In the short run, a competitive firm faces an infinitely elastic demand
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Unformatted text preview: curve (which corresponds to the market equilibrium price) . x (A monopolist faces the downward-sloping market demand curve) . x Each household has a downward sloping demand curve, but: o price is determined by market supply and demand o so shifts of one firms’s supply curve do not affect the market price x Each firm faces infinitely elastic (horizontal) demand market-level view Q M p S M D M comp. firm’s view Q F p S=MC D p* Page 108...
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## This note was uploaded on 12/29/2011 for the course ECO 311 taught by Professor Willis during the Fall '10 term at SUNY Stony Brook.

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