Microeconomics 10 17 12 S1 MC ATC D2 P1 AVC p2 P P2 P1 D1 Q1 Q Industry Show PC in long run Firm q1 q2 Shaded economic profit When a firm is making an economic profit in perfect competition because demand has gone up new firms will join the market bringing down the price not drawn An increase in technology On the industry side supply shifts to the right This leads to the price going down and the quantity going up Draw p2 across to the firm side Label as P2 mr2 d2 on firm side Everything shifts southeast on the firm chart Make sure MR and MC still intersect Not on test Show when profit maximization occurs when MR MC using math 1 Profit Where TR TC Profit P x Q AC x q aq 3 bq 2 cq dq 3 eq 2 fq g TR TC d profit dq 3aq 2 2bq c 3dq 2 2eq f 0 3aq 2 2bq 3dq 2 2eq f c TR aq 3 bq 2 cq TC dq 3 eq 2 fq g 3aq 2 0 2bq c 3dq 2 2eq f 3aq 2 2bq 3dq 2 2eq f c I have no idea what this means and it s not on the test Shut Down Rule Minimum of AVC is shutdown point If you go below shut down so you just pay average fixed cost but not variable cost MC AVC ATC MR1
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