TOPICS
- Characteristics of the
four product market models
- Pure Competition - short run equilibrium
OUTCOMES
List the four basic
market models and know characteristics and examples of
each.
Describe characteristics and
examples of a purely competitive industries.
Explain how a purely competitive
firm views demand for its product and marginal revenue
from each additional unit sold. Why is the demand curve
horizontal (perfectly price elastic) for purely
competitive firms?
Compute and graph average revenue
(also called price and demand), total revenue, and
marginal revenue when given a demand schedule for a
purely competitive firm.
Use both the total revenue minus
total cost approach, and the marginal revenue = marginal
cost approach, to determine the short run price and
output that maximizes profits (or minimizes losses) for a
competitive firm.
- with a table of
data
- on a graph with numbers
- on a graph using geometry (graph with
letters)
Draw the short run equilibrium
graphs for a purely competitive firm that (a) maximizes
profit, (b) minimizes loss, and (c) shuts
down
If MR = MC, what will a firm's
profits be?
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