Short run equilibrium - perfect competition, Microeconomics

Assignment Help:

Short run equilibrium - Perfect competition:

In the short-run, the perfectly competitive firm maximizes its profit by producing output where MC=MR=P. This is shown in the diagram below (labeled Figure I) as output Q1. The firm’s total profit is represented by the shaded rectangle P, ABC which is obtained as total revenue (rectangle P,OQ,C) less total cost (rectangle A,OQ,B). It follows that, in the short-run, the firm in perfect competition is making positive economic profit, otherwise referred to as abnormal profit or supernormal profit.

254_Short run equilibrium - Perfect competition.png

In the above diagram, the short-run marginal cost, average total cost, average variable cost curves are labelled SMC, SAC, and SAVC respectively.


Related Discussions:- Short run equilibrium - perfect competition

Describe the poverty cycle, Describe the poverty cycle and suggest how a de...

Describe the poverty cycle and suggest how a developing country can break the cycle. The poverty cycle is explained as the trap developing countries can land in; low incomes →

How elasticity is always referred to as a positive value, How elasticity is...

How elasticity is always referred to as a positive value even though it can be negative?  In economics, elasticity is measures of the incremental percentage change in single va

Game theory, Characteristics of prisoners dilemma

Characteristics of prisoners dilemma

122, 0.767 g of phosphorus and 0.650 g of chlorine were allowed to react. A...

0.767 g of phosphorus and 0.650 g of chlorine were allowed to react. After the reaction was complete, all of the chlorine had been consumed, but 0.650 g of phosphorus remained. How

Social cost, Social cost: Social cost of production refers to the cost...

Social cost: Social cost of production refers to the cost incurred by a society when its economic resources are used to produce a given commodity. The usage of a society’s res

Consumers demand function, A consumer purchases food (X) and clothing (Y). ...

A consumer purchases food (X) and clothing (Y). Her utility function is given by: , income is $100 and the price of food is $1 and the price of clothing is Py. a. Derive the equ

Marginal utility approach, using the marginal utility approach discuss how ...

using the marginal utility approach discuss how economic theory explains the optimum pattern of consumption for an individual consumer

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd