perfect competition and the supply curve

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13 Terms

1
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Total Revenue

P(Q)

2
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Profit

TR-TC

(P-ATC)Q

3
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Price taker

Buyer or seller who must accept the price determined by market. Their choice does not affect price

4
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MR

∆TR/ ∆Q

5
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MR= P for profit maximizing

Perfectly competitive market

6
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MR>MC

Firm should Produce more

7
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MR<MC

Firm should produce less

8
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PROFITABLE

TR>TC or P>ATC

9
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ATC

TC/Q or (FC+VC*Q)/Q

10
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firm “breaks even”

TR=TC

P=ATC

11
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TR<TC

P<ATC

Incur loss

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Break even point

Firm earns zero economic profit

13
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profit < AVC