1 / 6

Introduction to Perfect Competition

Module. Micro: Econ:. 22. 58. Introduction to Perfect Competition. KRUGMAN'S MICROECONOMICS for AP*. Margaret Ray and David Anderson. What you will learn in this Module :. How a price-taking firm determines its profit-maximizing quantity of output.

troy-camacho
Download Presentation

Introduction to Perfect Competition

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Module Micro: Econ: 22 58 Introduction to Perfect Competition • KRUGMAN'S • MICROECONOMICS for AP* Margaret Ray and David Anderson

  2. What you will learnin thisModule: • How a price-taking firm determines its profit-maximizing quantity of output. • How to assess whether or not a competitive firm is profitable.

  3. Profit Maximization in PC Optimal output rule: produce the quantity where MR=MC and profit will be maximized!

  4. Production and Profits • Firms are price-takers • P = MR • MR = D = AR • Profit maximization occurs at the output level where MC = P

  5. Profit Maximization in PC The profit maximizing level of output is found where P = MC on the graph.

  6. Calculating Profits • Total profit • π= TR – TC • If TR>TC; positive profit • If TR < TC; negative profit • Profit per unit • If P > ATC; positive profit • If P < ATC; negative profit

More Related