"shotr" - 1 õppematerjal

Pure Competition

­ TR­ TC = (P x Q) - (FC + VC) = economic profits · Break-even point = when normal profit is satisfied ­ Intersection of TC + TR (TR covers all TC) ­ No economic profit ­ only normal ­ There are 2 break-even points on graph ­ any point in between is economic profits ­ Profit is maximized on a graph where the vertical distance between TR and TC is the greatest Profit Maximization in Shotr-run: MR/MC Approach · As long as MRD ARP > AVC at the point where MC = MR, profit is maximized and production should continue · At any point where MR>MC, keep producing!! · You can still profit more · At any point where MR