Chap006.5 - Profit-Maximizing Firms in Perfectly...

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5 Chapter 6: Perfectly Competitive Supply Slide 25 Profit-Maximizing Firms in Perfectly Competitive Markets ± Some Important Cost Concepts z Assume that the cost of labor is $12/worker and is a variable cost. z Variable cost ² The sum of all payments made to the firms variable factors of production Chapter 6: Perfectly Competitive Supply Slide 26 Fixed, Variable, and Total Costs of Bottle Production 00 4 0 0 4 0 18 0 4 0 1 2 5 2 2 200 40 24 64 3 260 40 36 76 4 300 40 48 88 5 330 40 60 100 6 350 40 72 112 7 362 40 84 124 Employees per day Bottles per day Fixed cost ($/day) Variable cost ($/day) Total cost ($/day) Marginal cost ($/bottle) 0.15 0.10 0.20 0.33 0.40 0.60 1.00 Chapter 6: Perfectly Competitive Supply Slide 27 Profit-Maximizing Firms in Perfectly Competitive Markets ± Some Important Cost Concepts z Total Cost ² Fixed cost + variable cost z Marginal Cost ² Measures how total cost changes with a change in output Output TC Δ Δ = MC Chapter 6: Perfectly Competitive Supply Slide 28 Output, Revenue, Costs, and Profit 04 0 - 4 0 0 2 8 5 2 - 2 4 2 200 70 64 6 3 260 91 76 15 4 300 105 88 17 5 330 115.50 100 15.50 6 350 122.50 112 10.50 7 362 126.70
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This note was uploaded on 02/20/2012 for the course ECON 202 taught by Professor Brightwell during the Spring '08 term at Texas A&M.

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