1
Q
what are the main characteristics of perfect Competition
A
- price taking–> horizontal demand curve
- large number of buyers and sellers–> horizontal demand curve
- homogenous products–> horuznatl demand curve
- free entry and exit–> long run eq
2
Q
what are the three cases on whether a firm should shut down or continue producing
A
- p> ATC at q–>positive profit
- AVC< P< ATC–> is making a loss but still prpduces
- p< AVC–> firm shuts down
3
Q
what is the profit formula in the short run
A
(p-atc)q
4
Q
short run supply curve
A
comes from mc
5
Q
firms producer surplus in the short run?
A
aka psi so tr-tvc
6
Q
direct market supply function
A
once u get it from mc, times it by the number of firms
7
Q
zero output
A
min avc= mc
8
Q
zero profit
A
min atc=mc
