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9 Cards in this Set
- Front
- Back
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For the Schedule of Costs, how do you calculate Marginal Cost?
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Δ TC TC2-TC1
-------- or --------------- Δ Q Q2-Q1 |
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Total Revenue
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Price x Quantity
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Total Profit
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Total Revenue - Total Cost
-or- Q * ( P - ATC) |
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If a firm is losing more money when it produces 1 quantity than when it produces 0, what should it do?
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The firm should shut down to avoid losing variable costs (it is already losing its fixed costs).
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What must a firm cover in order to justify producing?
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Its Average Variable Cost (AVC). The firm should produce where: MR=MC as long as P>=AVC
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What must a firm cover in order to make a profit?
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Its Average Total Cost (ATC). The firm must cover both average fixed and variable costs to make a profit.
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When determining the Firm's Supply Schedule, what schedule should be used?
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The Schedule of Costs. For example, to find the Qs and Profit for a certain price, examine that price in the Schedule of Costs and use the corresponding Q, P, and ATC to arrive at the Total Profit.
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How do you find the equilibrium?
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Equilibrium is where Qd = Qs
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How do you find the long-term equilibrium?
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1. First, find the total number of firms the industry will support by dividing the next Qd/Qs. Take the current industry number and that number to get the remainder.
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