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Monopoly

The document discusses the key differences between perfect competition and monopoly market structures. Under perfect competition, there are many small firms producing an identical product, while a monopoly has a single firm producing a unique product with barriers to entry. A monopoly faces a downward-sloping demand curve and must lower prices to increase quantity sold, unlike perfect competition where firms are price takers.

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Microeconomics Monopoly and Anti-Trust Policy
Perfect Monopoly Competition Number of Firms Many One Type of Product Identical Unique Ease of Entry Easy Blocked Demand D = MR D > MR Commodities Utilities Examples Rice Government Apples
Perfect Monopoly Competition Number of Firms Many One Type of Product Identical Unique Ease of Entry Easy Blocked Demand D = MR D > MR Commodities Utilities Examples Rice Government Apples
Perfect Monopoly Competition Number of Firms Many One Type of Product Identical Unique Ease of Entry Easy Blocked Demand D = MR D > MR Commodities Utilities Examples Rice Government Apples
Monopoly
Monopoly Only Seller No Close Substitutes
Barriers to Entry
Barriers to Entry Government Protection Key Resource Network Externalities Economies of Scale
Patents Copyrights
Patents 20 Years Copyrights Lifetime plus 70 Years
Franchise
Franchise Exclusive Legal Provider
New Drugs
New Drugs 10 Years of Testing before Approval 10 Years of Monopoly
Network Externalities
Network Externalities The more who use it The more valuable it becomes
Natural Monopoly
Natural Monopoly One firm can supply entire market at a lower average cost than two or more firms
Natural Monopoly
Natural Monopoly The more I make the lower my costs Large Fixed Costs
Is competition always good?
Is competition always good? Sometimes it can lead to higher prices
Monopoly Output and Price
Monopoly Output and Price Lower Price: Good: Sell More Bad: Less Revenue Per Unit
Perfect Competition
Perfect Competition $ Quantity
Perfect Competition $ P Demand=MR Quantity
Perfect Competition $ Marginal Cost MC P Demand=MR Quantity
Perfect Competition $ Marginal Cost MC P Demand=MR Quantity
Perfect Competition $ Marginal Cost MC P Demand=MR Quantity Q
Perfect Competition $ Marginal Cost MC P Demand=MR Total Revenue Quantity Q
Perfect Competition $ Marginal Cost MC Average Cost ATC P Demand=MR Total Revenue Quantity Q
Perfect Competition $ Marginal Cost MC Average Cost ATC P Demand=MR Total Revenue Quantity Q
Perfect Competition $ Marginal Cost MC Average Cost ATC P Demand=MR Total Cost Quantity Q
Perfect Competition $ Marginal Cost MC Average Cost ATC P Demand=MR Profit Total Cost Quantity Q
Perfect Competition
Perfect Competition Demand
Perfect Competition Demand MR
Perfect Competition Demand = MR
Monopoly Demand MR
Monopoly MR Demand
Monopoly Demand MR
Perfect Competition Monopoly Q D TR MR D TR MR 1 2 3 4 5 Monopoly: To get more Quantity must lower price
Perfect Competition Monopoly Q D TR MR D TR MR 1 2 3 4 5 Monopoly: To get more Quantity must lower price
Perfect Competition Monopoly Q D TR MR D TR MR 1 $3 $3 $3 $5 $5 $5 2 $3 $6 $3 $4 $8 $3 3 $3 $9 $3 $3 $9 $1 4 $3 $12 $3 $2 $8 -$1 5 $3 $15 $3 $1 $5 -$3 Monopoly: To get more Quantity must lower price
Perfect Competition Monopoly Q D TR MR D TR MR 1 $3 $3 $3 $5 $5 $5 2 $3 $6 $3 $4 $8 $3 3 $3 $9 $3 $3 $9 $1 4 $3 $12 $3 $2 $8 -$1 5 $3 $15 $3 $1 $5 -$3 Monopoly: To get more Quantity must lower price
Perfect Competition Monopoly Q D TR MR D TR MR 1 $3 $3 $3 $5 $5 $5 2 $3 $6 $3 $4 $8 $3 3 $3 $9 $3 $3 $9 $1 4 $3 $12 $3 $2 $8 -$1 5 $3 $15 $3 $1 $5 -$3 Monopoly: To get more Quantity must lower price
Perfect Competition Monopoly Q D TR MR D TR MR 1 $3 $3 $3 $5 $5 $5 2 $3 $6 $3 $4 $8 $3 3 $3 $9 $3 $3 $9 $1 4 $3 $12 $3 $2 $8 -$1 5 $3 $15 $3 $1 $5 -$3 Monopoly: To get more Quantity must lower price
Perfect Competition Monopoly Q D TR MR D TR MR 1 $3 $3 $3 $5 $5 $5 2 $3 $6 $3 $4 $8 $3 3 $3 $9 $3 $3 $9 $1 4 $3 $12 $3 $2 $8 -$1 5 $3 $15 $3 $1 $5 -$3 Monopoly: To get more Quantity must lower price
Perfect Competition Monopoly Q D TR MR D TR MR 1 $3 $3 $3 $5 $5 $5 2 $3 $6 $3 $4 $8 $3 3 $3 $9 $3 $3 $9 $1 4 $3 $12 $3 $2 $8 -$1 5 $3 $15 $3 $1 $5 -$3 Monopoly: To get more Quantity must lower price
Perfect Competition Demand
Perfect Competition Demand = MR
Monopoly Demand MR
Price Qty TR MR Lose Gain Monopoly Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 Price $5 Lose $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $5 Lose $4 $3 Gain $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $5 Lose $4 $3 Gain $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $5 Lose $4 $3 Gain $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $5 $4 Lose $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $4 Lose $3 $2 Gain Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $4 $3 Lose $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $3 Lose $2 Demand Gain $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 -$4 $3 $2 Lose Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 -$4 $1 $3 $2 Lose Demand $1 Gain $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 -$4 $1 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 -$4 $1 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 -$4 $1 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 -$4 $1 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 -$4 $1 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 -$4 $1 $3 $2 Demand $1 $0 1 2 3 4 5 Qty Marginal Revenue MR
Monopoly $ Q
Monopoly $ Demand Q
Monopoly $ Demand Marginal Revenue MR Q
Monopoly $ Marginal Cost MC Demand Marginal Revenue MR Q
Monopoly $ Marginal Cost MC 1. MR=MC? Demand Marginal Revenue MR Q
Monopoly $ Marginal Cost MC 1. MR=MC? Demand Marginal Revenue MR Q
Monopoly $ Marginal Cost MC 1. MR=MC? Demand Marginal Revenue MR Q Q
Monopoly $ Marginal Cost MC 1. MR=MC? P Demand Marginal Revenue MR Q Q
Monopoly $ Marginal Cost MC 1. MR=MC? P 2. TR= P x Q Demand Marginal Revenue MR Q Q
Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P 2. TR= P x Q Demand Marginal Revenue MR Q Q
Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P 2. TR= P x Q 3. TC=ATC x Q Demand Marginal Revenue MR Q Q
Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P 2. TR= P x Q 3. TC=ATC x Q Demand Marginal Revenue MR Q Q
Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P 2. TR= P x Q 3. TC=ATC x Q Demand Marginal Revenue MR Q Q
Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P 2. TR= P x Q 3. TC=ATC x Q Demand Marginal Revenue MR Q Q
Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P 2. TR= P x Q 3. TC=ATC x Q Cost Demand Marginal Revenue MR Q Q
Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P 2. TR= P x Q 3. TC=ATC x Q 4. Profit =TR-TC or (P-ATC) x Q Cost Demand Marginal Revenue MR Q Q
Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P 2. TR= P x Q 3. TC=ATC x Q 4. Profit =TR-TC or (P-ATC) x Q Cost Demand Marginal Revenue MR Q Q
Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P Profit 2. TR= P x Q 3. TC=ATC x Q 4. Profit =TR-TC or (P-ATC) x Q Cost Demand Marginal Revenue MR Q Q
Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P Profit 2. TR= P x Q 3. TC=ATC x Q 4. Profit =TR-TC or (P-ATC) x Q Cost Demand Marginal Revenue MR Q Q
Monopoly $ Marginal Cost Consumer MC Average Cost Surplus ATC 1. MR=MC? P Profit 2. TR= P x Q 3. TC=ATC x Q 4. Profit =TR-TC or (P-ATC) x Q Cost Demand Marginal Revenue MR Q Q
Monopoly $ Marginal Cost Consumer MC Average Cost Surplus ATC 1. MR=MC? P Profit 2. TR= P x Q 3. TC=ATC x Q 4. Profit =TR-TC or (P-ATC) x Q Cost Demand Marginal Revenue MR Q Q
Monopoly $ Marginal Cost Consumer MC Average Cost Surplus ATC Deadweight 1. MR=MC? P Loss Profit 2. TR= P x Q 3. TC=ATC x Q 4. Profit =TR-TC or (P-ATC) x Q Cost Demand Marginal Revenue MR Q Q
Antitrust Laws
Antitrust Laws Collusion Felony

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Monopoly

  • 1.
    Microeconomics Monopoly and Anti-Trust Policy
  • 4.
    Perfect Monopoly Competition Number of Firms Many One Type of Product Identical Unique Ease of Entry Easy Blocked Demand D = MR D > MR Commodities Utilities Examples Rice Government Apples
  • 5.
    Perfect Monopoly Competition Number of Firms Many One Type of Product Identical Unique Ease of Entry Easy Blocked Demand D = MR D > MR Commodities Utilities Examples Rice Government Apples
  • 6.
    Perfect Monopoly Competition Number of Firms Many One Type of Product Identical Unique Ease of Entry Easy Blocked Demand D = MR D > MR Commodities Utilities Examples Rice Government Apples
  • 7.
  • 8.
    Monopoly Only Seller No Close Substitutes
  • 9.
  • 10.
    Barriers to Entry GovernmentProtection Key Resource Network Externalities Economies of Scale
  • 11.
  • 12.
    Patents 20 Years Copyrights Lifetime plus 70 Years
  • 13.
  • 14.
  • 15.
  • 16.
    New Drugs 10Years of Testing before Approval 10 Years of Monopoly
  • 17.
  • 18.
    Network Externalities The morewho use it The more valuable it becomes
  • 19.
  • 20.
    Natural Monopoly One firm can supply entire market at a lower average cost than two or more firms
  • 21.
  • 22.
    Natural Monopoly Themore I make the lower my costs Large Fixed Costs
  • 23.
  • 24.
    Is competition always good? Sometimes it can lead to higher prices
  • 25.
  • 26.
    Monopoly Output and Price Lower Price: Good: Sell More Bad: Less Revenue Per Unit
  • 27.
  • 28.
  • 29.
    Perfect Competition $ P Demand=MR Quantity
  • 30.
    Perfect Competition $ Marginal Cost MC P Demand=MR Quantity
  • 31.
    Perfect Competition $ Marginal Cost MC P Demand=MR Quantity
  • 32.
    Perfect Competition $ Marginal Cost MC P Demand=MR Quantity Q
  • 33.
    Perfect Competition $ Marginal Cost MC P Demand=MR Total Revenue Quantity Q
  • 34.
    Perfect Competition $ Marginal Cost MC Average Cost ATC P Demand=MR Total Revenue Quantity Q
  • 35.
    Perfect Competition $ Marginal Cost MC Average Cost ATC P Demand=MR Total Revenue Quantity Q
  • 36.
    Perfect Competition $ Marginal Cost MC Average Cost ATC P Demand=MR Total Cost Quantity Q
  • 37.
    Perfect Competition $ Marginal Cost MC Average Cost ATC P Demand=MR Profit Total Cost Quantity Q
  • 38.
  • 39.
  • 40.
  • 41.
  • 42.
    Monopoly Demand MR
  • 43.
    Monopoly MR Demand
  • 44.
    Monopoly Demand MR
  • 45.
    Perfect Competition Monopoly Q D TR MR D TR MR 1 2 3 4 5 Monopoly: To get more Quantity must lower price
  • 46.
    Perfect Competition Monopoly Q D TR MR D TR MR 1 2 3 4 5 Monopoly: To get more Quantity must lower price
  • 47.
    Perfect Competition Monopoly Q D TR MR D TR MR 1 $3 $3 $3 $5 $5 $5 2 $3 $6 $3 $4 $8 $3 3 $3 $9 $3 $3 $9 $1 4 $3 $12 $3 $2 $8 -$1 5 $3 $15 $3 $1 $5 -$3 Monopoly: To get more Quantity must lower price
  • 48.
    Perfect Competition Monopoly Q D TR MR D TR MR 1 $3 $3 $3 $5 $5 $5 2 $3 $6 $3 $4 $8 $3 3 $3 $9 $3 $3 $9 $1 4 $3 $12 $3 $2 $8 -$1 5 $3 $15 $3 $1 $5 -$3 Monopoly: To get more Quantity must lower price
  • 49.
    Perfect Competition Monopoly Q D TR MR D TR MR 1 $3 $3 $3 $5 $5 $5 2 $3 $6 $3 $4 $8 $3 3 $3 $9 $3 $3 $9 $1 4 $3 $12 $3 $2 $8 -$1 5 $3 $15 $3 $1 $5 -$3 Monopoly: To get more Quantity must lower price
  • 50.
    Perfect Competition Monopoly Q D TR MR D TR MR 1 $3 $3 $3 $5 $5 $5 2 $3 $6 $3 $4 $8 $3 3 $3 $9 $3 $3 $9 $1 4 $3 $12 $3 $2 $8 -$1 5 $3 $15 $3 $1 $5 -$3 Monopoly: To get more Quantity must lower price
  • 51.
    Perfect Competition Monopoly Q D TR MR D TR MR 1 $3 $3 $3 $5 $5 $5 2 $3 $6 $3 $4 $8 $3 3 $3 $9 $3 $3 $9 $1 4 $3 $12 $3 $2 $8 -$1 5 $3 $15 $3 $1 $5 -$3 Monopoly: To get more Quantity must lower price
  • 52.
    Perfect Competition Monopoly Q D TR MR D TR MR 1 $3 $3 $3 $5 $5 $5 2 $3 $6 $3 $4 $8 $3 3 $3 $9 $3 $3 $9 $1 4 $3 $12 $3 $2 $8 -$1 5 $3 $15 $3 $1 $5 -$3 Monopoly: To get more Quantity must lower price
  • 53.
  • 54.
  • 55.
    Monopoly Demand MR
  • 56.
    Price Qty TR MR Lose Gain Monopoly Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 57.
    Price Qty TR MR Lose Gain Monopoly $5 1 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 58.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 59.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 60.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 61.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 62.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 63.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 64.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 65.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 Price $5 Lose $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 66.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $5 Lose $4 $3 Gain $2 Demand $1 $0 1 2 3 4 5 Qty
  • 67.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $5 Lose $4 $3 Gain $2 Demand $1 $0 1 2 3 4 5 Qty
  • 68.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $5 Lose $4 $3 Gain $2 Demand $1 $0 1 2 3 4 5 Qty
  • 69.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 70.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 71.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 72.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 73.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $5 $4 Lose $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 74.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $4 Lose $3 $2 Gain Demand $1 $0 1 2 3 4 5 Qty
  • 75.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 76.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 77.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 78.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 79.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $4 $3 Lose $2 Demand $1 $0 1 2 3 4 5 Qty
  • 80.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $3 Lose $2 Demand Gain $1 $0 1 2 3 4 5 Qty
  • 81.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 82.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 83.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 84.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 85.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 -$4 $3 $2 Lose Demand $1 $0 1 2 3 4 5 Qty
  • 86.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 -$4 $1 $3 $2 Lose Demand $1 Gain $0 1 2 3 4 5 Qty
  • 87.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 -$4 $1 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 88.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 -$4 $1 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 89.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 -$4 $1 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 90.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 -$4 $1 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 91.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 -$4 $1 $3 $2 Demand $1 $0 1 2 3 4 5 Qty
  • 92.
    Price Qty TR MR Lose Gain Monopoly $5 1 $5 $5 $4 2 $8 $3 -$1 $4 Price $3 3 $9 $1 -$2 $3 $5 $2 4 $8 -$1 -$3 $2 $4 $1 5 $5 -$3 -$4 $1 $3 $2 Demand $1 $0 1 2 3 4 5 Qty Marginal Revenue MR
  • 93.
  • 94.
    Monopoly $ Demand Q
  • 95.
    Monopoly $ Demand Marginal Revenue MR Q
  • 96.
    Monopoly $ Marginal Cost MC Demand Marginal Revenue MR Q
  • 97.
    Monopoly $ Marginal Cost MC 1. MR=MC? Demand Marginal Revenue MR Q
  • 98.
    Monopoly $ Marginal Cost MC 1. MR=MC? Demand Marginal Revenue MR Q
  • 99.
    Monopoly $ Marginal Cost MC 1. MR=MC? Demand Marginal Revenue MR Q Q
  • 100.
    Monopoly $ Marginal Cost MC 1. MR=MC? P Demand Marginal Revenue MR Q Q
  • 101.
    Monopoly $ Marginal Cost MC 1. MR=MC? P 2. TR= P x Q Demand Marginal Revenue MR Q Q
  • 102.
    Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P 2. TR= P x Q Demand Marginal Revenue MR Q Q
  • 103.
    Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P 2. TR= P x Q 3. TC=ATC x Q Demand Marginal Revenue MR Q Q
  • 104.
    Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P 2. TR= P x Q 3. TC=ATC x Q Demand Marginal Revenue MR Q Q
  • 105.
    Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P 2. TR= P x Q 3. TC=ATC x Q Demand Marginal Revenue MR Q Q
  • 106.
    Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P 2. TR= P x Q 3. TC=ATC x Q Demand Marginal Revenue MR Q Q
  • 107.
    Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P 2. TR= P x Q 3. TC=ATC x Q Cost Demand Marginal Revenue MR Q Q
  • 108.
    Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P 2. TR= P x Q 3. TC=ATC x Q 4. Profit =TR-TC or (P-ATC) x Q Cost Demand Marginal Revenue MR Q Q
  • 109.
    Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P 2. TR= P x Q 3. TC=ATC x Q 4. Profit =TR-TC or (P-ATC) x Q Cost Demand Marginal Revenue MR Q Q
  • 110.
    Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P Profit 2. TR= P x Q 3. TC=ATC x Q 4. Profit =TR-TC or (P-ATC) x Q Cost Demand Marginal Revenue MR Q Q
  • 111.
    Monopoly $ Marginal Cost MC Average Cost ATC 1. MR=MC? P Profit 2. TR= P x Q 3. TC=ATC x Q 4. Profit =TR-TC or (P-ATC) x Q Cost Demand Marginal Revenue MR Q Q
  • 112.
    Monopoly $ Marginal Cost Consumer MC Average Cost Surplus ATC 1. MR=MC? P Profit 2. TR= P x Q 3. TC=ATC x Q 4. Profit =TR-TC or (P-ATC) x Q Cost Demand Marginal Revenue MR Q Q
  • 113.
    Monopoly $ Marginal Cost Consumer MC Average Cost Surplus ATC 1. MR=MC? P Profit 2. TR= P x Q 3. TC=ATC x Q 4. Profit =TR-TC or (P-ATC) x Q Cost Demand Marginal Revenue MR Q Q
  • 114.
    Monopoly $ Marginal Cost Consumer MC Average Cost Surplus ATC Deadweight 1. MR=MC? P Loss Profit 2. TR= P x Q 3. TC=ATC x Q 4. Profit =TR-TC or (P-ATC) x Q Cost Demand Marginal Revenue MR Q Q
  • 115.
  • 116.

Editor's Notes

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  • #17 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #18 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #19 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #20 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #21 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #22 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #23 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #24 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #25 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #26 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #27 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #28 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #29 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #30 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #31 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #32 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #33 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #34 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #35 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
  • #36 Perfect Competition\n\nIn this video we’re going to talk about Perfect Competition.\n\nFirst we’ll draw and label our price-quantity graph.\n\nThen we’ll draw the demand curve.\n\nRemember that under perfect competition there is one price level for all individual sellers. This means the demand curve is flat. This also means the marginal revenue curve is the same as the demand curve. So price and demand and marginal revenue are all on the same line.\n\nSo the first question we want to answer is “At what level should we produce to maximize profits?” We always answer this question with the equation MR=MC.\nSo we need to see a marginal cost curve. This curve is a “U-shape” to indicate that costs typically tend to decline and then increase. \n\nNow that we have a MR and a MC curve we can pin-point the intersection. \n\nThe next step is to draw a vertical line down to the Quantity axis. This line will point to the quantity we should produce to maximize profits. \n\nWe can then calculate Total Revenue. This is P times Q, or this area.\n\nThe next step is to calculate Total Costs. Total Costs are calculated as ATC x Q. We need the ATC curve to do this. Once we know the ATC then we pin-point the intersection of the ATC curve and the vertical line we drew. Then we daw a horizontal line from this point over to the price axis. The area below this line represents our total costs. \n\nNow we can calculate profits. The equation is TR -TC, or another way is (Price-ATC) x Q. \n\nLet’s quickly review. We start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. We then look at the Average Total Cost curve and pinpoint where it crosses our line and then draw a horizontal line. The area below this line is Total Cost and the area above is profit. \n\nLets look at another example.\n\nWe start with a flat demand curve which is also our marginal revenue curve. We then add a marginal cost curve. Using MR=MR we pinpoint the profit maximizing location and draw a line down to quantity. This are is total revenue. In this case the ATC curve is above the price line. If this is the case we will be looking for the location that minimizes losses. We pinpoint where ATC crosses our line and then draw a horizontal line. The area is Total Cost. Since Total Costs are larger than Total Revenue, this area represents our losses. Remember that using MC=MR we can figure out where our losses are minimized. \n\nAlright, now you know how to analyze Perfect Competition. \n\nDon’t forget you can rewind this video to make sure you understand how the graph works.\n
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