ATC B D A P=MR AVC 0 Output Competitive Firm Incurring Losses
P Price(dollars per unit of output) ATC D P = MR C Output Competitive Firm Incurring Losses F O
A competitive firm should shut down if price is below ATC. If the firm has sunk costs that it amortizes(分期清偿，摊提) and treats as fixed,it may produce in the short run if price is greater than average variable cost. Shut-Down Rule:The firm should shut down if the price of the products is less than the average economic cost of production at the profit-maximizing output
A competitive firm should shut down if price is below ATC. If the firm has sunk costs that it amortizes (分期清偿, 摊提) and treats as fixed, it may produce in the short run if price is greater than average variable cost. Shut-Down Rule: The firm should shut down if the price of the products is less than the average economic cost of production at the profit-maximizing output
8.5 The Competitive Firm's Short-Run Supply Curve Price dollars per MC unit) P2 P P=AVC 0 91 92 Output The Short-Run Supply Curve for a Competitive Firm
The Short-Run Supply Curve for a Competitive Firm 8.5 The Competitive Firm’s Short-Run Supply Curve
In the short run,the firm chooses its output so that marginal cost MC is equal to price as long as the firm covers (its average economic cost.When all fixed costs are amortized sunk costs,the short-run supply curve is given by the crosshatched(用交叉排线画出阴影的)portion of the marginal cost curve
In the short run, the firm chooses its output so that marginal cost MC is equal to price as long as the firm covers (弥补) its average economic cost. When all fixed costs are amortized sunk costs, the short-run supply curve is given by the crosshatched (用交叉排线画出阴影的) portion of the marginal cost curve
Price,Cost (dollars per unit) MC2 MC $5 92 q1 Output The Response of a Firm to a Change in Input Price
The Response of a Firm to a Change in Input Price