Economic Losses(2 pages)
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This lecture covered economic losses
- Lecture number:
- Lecture Note
- University of Oklahoma
- Econ 1123 - Princ. of Econ-Micro
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ECON 1123 1st Edition Lecture 13 Outline From Previous Lecture (Lecture 12) I. Supply in Purely Competitive Markets A) The Characteristics of Pure competition B) The Purely Competitive firm in short-run equilibrium C) The competitive firm’s marginal revenue schedule D) Short Run Profits and Average Total Costs Outline Lecture 13 I. Economic Losses II. Short Run Losses and Average Variable Costs III. Firm and Market Supply in the short run Lecture 13 Notes I. Economic Losses If price = ATC -> you will have zero economic profit If price > ATC -> positive economic profit If price<ATC -> negative economic profit II. Short Run Losses and Average Variable Costs Short run losses and average variable costs. Rule: The competitive firm will cease production (shut down) when price falls below the minimum average variable costs Will a firm always shut down if they aren’t making a profit? Not necessarily: the firm may be staying in business to minimize losses by paying back the money for their factory or things like that III. Firm and Market Supply in the short run Market supply = sum of individual firms supply (mc) schedules You can derive the market supply graph from adding all of the firms mc schedules together. (Qo=QAo+QBo+QCo) If the firm has zero economic profits that implies that price=average total cost These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.
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