ECO101H1 Lecture Notes - Perfect Competition, Demand Curve, Market Price
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ECO101H1 Full Course Notes
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3. 2 firm"s mc curve = firm"s ss curve (if p > avc) Marker ss = sum of firms" ss = sum of firms" mc. In order to identify the level of output the firm will choose in the perfectly competitive industry. Simply needs to know: what is the market price. Mr = mc => q* is profit-maximizing level of output. Price is clearly greater than marginal cost, additional revenue would exceed additional cost. continue to expand output: level of profits, entry and exit. In order to answer this question, diagram will become more complicated. Tr > tc => your earning economic profits => tr/q > tc/q <=> Tr = tc => breakeven <=> p=atc. Tr loss => tr/q < tc/q <=> p