Economics 8
- Created by: Gabrielle
- Created on: 30-12-13 11:34
View mindmap
- Firm's Production Decisions
- A firm will maximize profits at an output where MR = MC
- A firm’s supply curve when price is above ATC is its marginal cost curve
- The Firm’s Short-Run Decision to Shut Down
- A shutdown short-run decision not to produce anything during a specific period of time
- Exit is a long-run decision to leave the market
- The area of the shaded box between price and average total cost represents the firm’s profit
- Why the Long-Run Supply Curve Might Slope Upward
- Firms may have different costs
- New entrants may have higher costs and need a higher price to make entry profitable
- This implies that efficient firms can earn abnormal profits in the long run
- Some resources used in production may be available only in limited quantities
- An increase in the demand for a limited factor of production will raise prices
- Firms may have different costs
Comments
No comments have yet been made