Presented December 10th, 2012 AP Economics Maury High School FVCproductions https://fvcproductions.com

1. Perfect
Competition
Block 4: Frances, Mitchell, Phavon, Ted
x

2. • large # of very small buyers and
sellers
• homogenous products
• easy entry and exit to industry
• perfect information
• no government intervention
• firms are profit maximizers
THE ASSUMPTIONS

3. REALITYrivalry
among
firms
where
economics
forces
work
unimpeded
MC
FC
PS TP
theoretical!!

4. A Market A Firm
$10
D S
A lesson in dealing with avocados.
Quantity
PRICE
D=MR
MC
ATC
short run with single firm making profit
100,000
$10
QuantityPRICE

5. BONUS
ROUND
• TR:
• TC:
• Profit:
A Single Firm
P=D=AR=MR
MC
ATC
10
$10
$8
Quantity
PRICE
$100
$80
$20

6. A Market A Firm
P1
P2
D S S2
Quantity
PRICE
P=D=AR=MR
P2=D2=AR2=MR2
MC
ATC
Q2 Q1
long run with single firm making profit
Q QuantityPRICE

7. When ATC
curve is
below MR
curve
PROFIT LOSS
Where
MC=MR
When ATC
curve is
above MR
curve
Where
MC=MR
BREAKING
EVEN
OR
ZERO
PROFIT

8. Shutdown Point
Short Run
AVC at
minimum
AVC at
minimum

9. QUIZ TIMEs
k

10. . Perfect competition is an industry with
A) a few firms producing identical goods.
B) many firms producing goods that differ
somewhat.
C) a few firms producing goods that differ
somewhat in quality.
D) many firms producing identical goods.
f

11. 2. In a perfectly competitive industry, there are
A) one firm that sets the price for the others
to follow.
B) many sellers, but there might be only one or
two buyers.
C) many buyers, but there might be only one or
two sellers.
D) many buyers and many sellers
w

12. 3. A firm in a perfectly competitive industry
has
A. a perfectly elastic supply curve.
B. a perfectly elastic demand curve.
C. a negatively sloped demand curve.
D. a positively sloped demand curve.
r

13. 4. Which of the following is most likely to
happen if a typical firm in a perfectly competitive
market is experiencing an average revenue that is
greater than its average cost?
A. Price will increase.
B. Other firms will enter the market
C. Other firms will leave the market
D. Demand will decrease
t

14. 5. The shutdown point occurs at the level of
output for which the _____ is at its
minimum.
A) marginal cost
B) total cost
C) average fixed cost
D) average variable cost
i

15. And the credits go to...
economicshelp.org
ACDC Leadership
apecon.yolasite.com
Khan Academy
Kyle Purpura
My wonderful team
from Block 4.

16. PROJECT
DATE CLIENT
DECEMBER 11 2012 AP MICRO ECON BLOCK 4
PERFECT COMPETITION FIN
ACRONYMS YOU SHOULD KNOW: FC, MC, PS, TP
THANKS FOR
WATCHING
APPLES/PRODUCE MILK ANTIQUE MARKETS