Marginal Costs and the Supply Curve -Perfectively Competitive Firm

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What do Marginal Costs and the Supply Curve look like for a Perfectively Competitive Firm? For a perfectly competitive firm, the marginal cost curve is identical to the firm’s supply curve starting from the minimum point on the average variable cost curve. To...

Profit Maximization in Perfectly Competitive Market

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Highest Profit Point in a Perfectly Competitive Market? A perfectly competitive firm can sell as large a quantity as it wishes, as long as it accepts the prevailing market price. The total revenue depends on the quantity sold and the price charged. If the...

Profit Maximization – Marginal Revenue and Costs

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

Using Marginal Revenue and Marginal Costs to Maximize Profit The approach that we described in the previous section, using total revenue and total cost, is not the only approach to determining the profit maximizing level of output. In this section, we provide an...

Marginal Revenue Curve

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Marginal Revenue Curve? The marginal revenue curve shows the additional revenue gained from selling one more unit. As mentioned before, a firm in perfect competition faces a perfectly elastic demand curve for its product—that is, the firm’s demand curve is...

Profit Margin and Average Total Cost

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

How does Average total Cost Relate to Profit Margin? Does maximizing profit (producing where MR = MC) imply an actual economic profit? The answer depends on the relationship between price and average total cost, which is the average profit or profit margin. If the...

Cost Curve – Break Even Point

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Break Even Point on the Cost Curve? Again, the perfectly competitive firm will choose the level of output where Price = MR = MC. At this price and output level, where the marginal cost curve is crossing the average cost curve, the price the firm receives...