![]() The firm maximizes its profit at the output X e, where the distance between the TR and TC curves is the greatest. ![]() The shape of the total-cost curve reflects the U shape of the average-cost curve, that is, the law of variable proportions. It is constant and equal to the prevailing market price, since all units are sold at the same price. ![]() The slope of the TR curve is the marginal revenue. The firm is a price-taker and can sell any amount of output at the going market price, with its TR increasing proportionately with its sales. The total-revenue curve is a straight line through the origin, showing that the price is constant at all levels of output. In figure 5.2 we show the total revenue and total cost curves of a firm in a perfectly competitive market. Either by using the TR and TC curves, or the MR and MC curves. The equilibrium of the firm may be shown graphically in two ways. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |