Revenue of a Perfectly Competitive Firm Average revenue tells us how much a firm receives for the typical unit sold AR TRP×Q =P QQ
Revenue of a Perfectly Competitive Firm Average revenue tells us how much a firm receives for the typical unit sold. = P Q P Q = Q TR AR =
Revenue of a Perfectly Competitive Firm Marginal revenue is the change in total revenue from an additional unit sold △TR Mr P △Q
Revenue of a Perfectly Competitive Firm Marginal revenue is the change in total revenue from an additional unit sold. P Q TR MR = =
Demand. Price, AR. and Mr Firm $4 dEP=AREMR
Demand, Price, AR, and MR $4 d=P=AR=MR Firm P Q
Profit maximization for the Perfectly Competitive Firm The goal of a competitive firm is to maximize profit This means that the firm will want to produce the quantity that maximizes the difference between total revenue and total cost
Profit Maximization for the Perfectly Competitive Firm The goal of a competitive firm is to maximize profit. This means that the firm will want to produce the quantity that maximizes the difference between total revenue and total cost
Profit maximization for the Perfectly Competitive Firm Costs The firm maximizes and profit by producing Revenue the quantity at which MEMc MC ATC PEMR P三AR=MR Avc c e1 QN MAX Q Quantity
P=MR1 P = AR = MR MC Profit Maximization for the Perfectly Competitive Firm 0 Quantity Costs and Revenue ATC AVC QMAX The firm maximizes profit by producing the quantity at which MR=MC. MC1 Q1 MC2 Q2