Microeconomics Notes 8
Microeconomics Notes 8 ECON 2022
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This 2 page Class Notes was uploaded by Paige Holub on Saturday March 19, 2016. The Class Notes belongs to ECON 2022 at University of Colorado Denver taught by Brian Duncan in Winter 2016. Since its upload, it has received 23 views. For similar materials see Principles of Microeconomics in Economcs at University of Colorado Denver.
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Date Created: 03/19/16
Paige DeWitt-Holub 3/14 “Lecture #10 I. Properties of cost curves II. Perfect competition A. Money buyers and sellers B. Firms are price takers C. Fire entry and exit D. Demand curve perceived by firms III. Profit maxim1zation A. 3 Rules.” Average cost efficiency correlates with price decrease and demand popularity until you reach a peak in which your company has to makeup for this -make sure to draw ATC < AVC as decreasing in the space between each curve -utilize the comparison of GPA’s to visualize the Average Variable Cost (AVC) -> marginal cannot be above the grade average, because a grade point would not drop the average -> also can be a shape but the marginal grade has to go through the maximum point (up or down correlation) -to split up a marginal cost graph, you cannot pick a point like a where the curve is decreasing, average variable cost will probably be rising by section D if the graph is a positive curve -most efficient sizes for a company make sense for society but not for the firm who might be selling a higher, monopoly, competition, etc. -by looking at a graph you’ve drawn, you can find that the average total cost is moving up (increasing), down (decreasing) -perfectly competitive firm scenarios vs. what we have been doing for the rest of the class which discusses price only -define good, if you stop buying one individual believably has not as much effect but a group of people do, to have to alter one’s price to create a profit in a competitive market you are not in a competitive market, scale, if you don’t maximize your profit you might go out of business “Perfect competition: A. Many buyers and sellers B. Firms are price takers C. Firm entry and exit 1. Government regulations (patent, laws) 1 All quotations are taken from the board of Professor Duncan. 2. Control of a scarce input 3. Economies of scale (natural barrier) Profit Maximization “Lecture #11 I. Profit maximization for a competitive form A. 3 Rules B. Calculating Profit or loss C. Shut down or operate at a loss Profit maximization: Profit Revenue can be equated to Total Revenue – Total Cost 3 Rules 1. MR = MC 2. MC is rising 3. Is p* > AVC 4. If only shut down Competitive firm Marginal Revenue = the Price P* = MC MR” Three equal signs difference -q* is a profit maximizing structure -Marginal Revenue is always equal to the Profit Maximizing Structure -HxL = area of profit/profit (positive/negative) -price is bigger than the average total cost if you have to draw a downwards line -marginal cost is rising, circle the intersection of MC and MR/ not maximizing loss