Chap006.7

# Chap006.7 - corresponding price. Chapter 6: Perfectly...

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7 Chapter 6: Perfectly Competitive Supply Slide 37 0.12 Price = MC at 260 bottles/day ATC = .12/bottle TR = (.20)(260) = \$52/day TC = (.12)(26) = \$31.20/day Profit = \$52 - \$31.20 = \$20.80/day 0.20 260 Price Price = Marginal Cost: The Perfectly Competitive Firm’s Profit-Maximizing Supply Rule Output (bottles/day) Cost (\$/bottle) MC ATC AVC Chapter 6: Perfectly Competitive Supply Slide 38 0.10 Price = .08/bottle P = MC at 180 bottles/day ATC = .10/bottle P < ATC by .02/bottle Profit = -.02 x 180 = -3.60//day 180 Price 0.08 A Negative Profit Output (bottles/day) MC ATC AVC Chapter 6: Perfectly Competitive Supply Slide 39 Profit-Maximizing Firms in Perfectly Competitive Markets ± The Law of Supply z The perfectly competitive firm’s supply curve is its marginal cost curve z Every quantity of output along the market supply represents the summation of all the quantities individual sellers offer at the
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Unformatted text preview: corresponding price. Chapter 6: Perfectly Competitive Supply Slide 40 Profit-Maximizing Firms in Perfectly Competitive Markets ± The Law of Supply z At every point along the market supply curve, price measures what it would cost producers to expand production by one unit. z Recall ² Demand measures the benefit side of the market. ² Supply measures the cost side of the market. Chapter 6: Perfectly Competitive Supply Slide 41 Determinants of Supply Revisited ± Determinants of Supply z Technology z Input prices z Number of suppliers z Expectations z Changes in prices of other products Chapter 6: Perfectly Competitive Supply Slide 42 Applying the Theory of Supply ± Economic Naturalist z When recycling is left to private market forces, why are many more aluminum beverage containers recycled than glass ones?...
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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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