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Lecture 7

ECO101H1 Lecture Notes - Lecture 7: Average Variable Cost, Warren Buffett, Marginal Revenue


Department
Economics
Course Code
ECO101H1
Professor
James Pesando
Lecture
7

This preview shows pages 1-3. to view the full 9 pages of the document.
[ECO100 ECONOMICS]
PERFECT COMPETITION
 
  
! "#$  % &
! '()**
!  +* +,,- ./0
 1"23'2$ 
4 ,)#'1#5,) 6 7'
8   '
9)
,3
 2$ 3 
 :"#$  % ;) 
EX.1 < - '0) )  )'' '
=>0? 3- 0"@
0? )- 0")@
(>0<
0-)( ) ) "'(30
5,59A
 "));;-; 30)
(" '
EX.2 ?BC- 0
1D ))EFG; 3))"
(3 "
EX.3 & '>3D
?) 3D@
0 <;3'57251'-));3'
:D 0
0  $ ) '3-&B52,&2<2H50
I3>
0 2)" 52I2'3''D 
0 );" "$' ));3 )

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[ECO100 ECONOMICS]
9)
 3 >2$
Perfectly Compeve rm: P=MR=AR
Perfectly Compeve Firm
MR=P 
Marginal Revenue

All Firms - ' 3"0
AR=P 
Average Revenue
"$  %>5 )
0   D- : 0
0 ))$  %"95/2D 
"#$  % &
9)!
J>.
$'-  0
J!>K
-' 0
J-J0>*
"#$  % -')0
=  -L=0 AR-M=0 MR-NMN=0
 8 8 8 8
 8  8 8
! 8 O 8 8
 8  8 8
4 8 ! 8 8

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[ECO100 ECONOMICS]
;
*"#$  % 
*3"
5 )>
"')pro%t-maximizing-J0)&1<)'(' )"+MC
)'
5perfectly compeve %rm    >
0 ( ' D'' 
;0 "(    
0 (   D''  
d) Revenue will fall to zero
0 );
 !!
"# $
%!#&!!#&
,3
5  PPPP"( 3PPPP
QR "#$  % ,)'S
"#$  %  
( )"+
9)
MC=SS
' (marginal-cost
 #
! (supply curve
,)'( 
  )'( TR<TVC)
Q   "$' "')DS
 K/
TR
Q
K
TVC
Q
Q*SP<AVC
!  +3*"+-P>AVC0
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