Total cost includes all the opportunity costs of the firm In the zero profit

Total cost includes all the opportunity costs of the

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Total cost includes all the opportunity costs of the firm. In the zero- profit equilibrium, the firm’s revenue compensates the owners for the time and money they expend to keep the business going.
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Increase in Demand in the Short Run An increase in demand raises price and quantity in the short run. Firms earn profits because price now exceeds average total cost.
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Increase in Demand in the Short Run... Market Firm Quantity (firm) 0 Price MC ATC P 1 Quantity (market) Price 0 D 1 P 1 Q 1 A S 1 Long-run supply (a) Initial Condition P
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D 2 Increase in Demand in the Short Run... Market Firm Quantity (firm) 0 Price MC ATC P 1 Quantity (market) Price 0 D 1 P 1 Q 1 A S 1 Long-run supply (b) Short-Run Response Q 2 B P 2 P 2 Profit
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Increase in Demand in the Short Run... Market Firm Quantity (firm) 0 Price MC ATC P 1 Quantity (market) Price 0 D 1 P 1 Q 1 A S 1 Long-run supply (c) Long-Run Response D 2 B Q 2 P 2 S 2 C Q 3
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