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Econ_100_Ch10Part2 - ECON 100 Introduction to Microeconomic...

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Slide 1 of 65 ECON 100: Introduction to Microeconomic Theory Lecture 12 Yilan Xu
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Profit, Break-Even or Loss The break-even price of a price-taking firm is the market price at which it earns zero profits. Whenever market price exceeds minimum average total cost, the producer is profitable. Whenever the market price equals minimum average total cost, the producer breaks even. Whenever market price is less than minimum average total cost, the producer is unprofitable.
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The Short-Run Individual Supply Curve 7 6 5 4 3 3.5 2 1 0 $18 16 14 12 MC ATC C B A E Price, cost of bushel Quantity of tomatoes (bushels) 10
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The Short-Run Individual Supply Curve 7 6 5 4 3 3.5 2 1 0 $18 16 14 12 10 MC ATC AVC C B A E Price, cost of bushel Quantity of tomatoes (bushels)
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The Short-Run Individual Supply Curve 7 6 5 4 3 3.5 2 1 0 $18 16 14 12 10 MC ATC AVC C B A E Minimum average variable cost Shut- down price Price, cost of bushel Quantity of tomatoes (bushels)
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The Short-Run Individual Supply Curve The short-run individual supply curve shows how an individual producer’s optimal output quantity depends on the market price, taking fixed cost as given. A firm will cease production in the short run if the market price falls below the shut- down price , which is equal to minimum average variable cost. 7 6 5 4 3 3.5 2 1 0 $18 16 14 12 10 MC ATC AVC C B A E Minimum average variable cost Short- run individua l supply curve Shut- down price Price, cost of bushel Quantity of tomatoes (bushels)
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Summary of the Competitive Firm’s Profitability and Production Conditions
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Slide 8 of 65 Industry Supply Curves
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