| Line 47: |
Line 47: |
| | | | |
| | complements | | complements |
| | + | |
| | + | economic point at which firms sell their goods (where MR=MC) |
| | + | |
| | + | accounting profit (total revenue minus explicit cost) |
| | + | |
| | + | economic profit (total revenue minus both explicit and implicit costs) |
| | | | |
| | ===Medium=== | | ===Medium=== |
| Line 99: |
Line 105: |
| | | | |
| | perfect competition (know the conditions for it) | | perfect competition (know the conditions for it) |
| − |
| |
| − | economic point at which firms sell their goods (where MR=MC)
| |
| − |
| |
| − | accounting profit (total revenue minus explicit cost)
| |
| − |
| |
| − | economic profit (total revenue minus both explicit and implicit costs)
| |
| | | | |
| | In a perfectly competitive market ... | | In a perfectly competitive market ... |
| Line 113: |
Line 113: |
| | :otherwise the company changes Q until it equals or exceeds AVC | | :otherwise the company changes Q until it equals or exceeds AVC |
| | :if no such Q exists then the company is better off shutting down | | :if no such Q exists then the company is better off shutting down |
| | + | |
| | + | ===Equations of Medium Difficulty=== |
| | + | :At Q = 0, TC = TFC |
| | + | :At Q = 1, MC = TVC |
| | + | :At all Q > 0, AVC = TVC / Q |
| | + | :At all Q > 0, AFC = TFC / Q |
| | + | :At all Q, ATC = AVC + AFC |
| | + | :TVC = sum of MC |
| | + | :TFC = Q x AFC |
| | + | :TVC = Q x AVC |
| | + | :TC = Q x ATC |
| | | | |
| | ===Honors=== | | ===Honors=== |
| Line 132: |
Line 143: |
| | mathematical solutions and specific calculations | | mathematical solutions and specific calculations |
| | | | |
| − | ===Equations=== | + | ===Equations of Honors Difficulty=== |
| − | :At Q = 0, TC = TFC
| + | |
| − | :At Q = 1, MC = TVC
| |
| − | :At all Q > 0, AVC = TVC / Q
| |
| − | :At all Q > 0, AFC = TFC / Q
| |
| − | :At all Q, ATC = AVC + AFC
| |
| | :MC = W / MP (where W is wage per unit of labor, and labor is the only input) | | :MC = W / MP (where W is wage per unit of labor, and labor is the only input) |
| − | :TVC = sum of MC
| |
| | :AVC = W / AP when labor is the only input and W is the wage or cost of the labor | | :AVC = W / AP when labor is the only input and W is the wage or cost of the labor |
| − | :TFC = Q x AFC
| |
| − | :TVC = Q x AVC
| |
| − | :TC = Q x ATC
| |
| | :long run average costs (LRAC) are never more than short run average costs (SRAC) for a given Q. Why? See the alternative definition of “long run” in “Medium” list above | | :long run average costs (LRAC) are never more than short run average costs (SRAC) for a given Q. Why? See the alternative definition of “long run” in “Medium” list above |
| | :LRAC = P x (I / Q), where I is input and Q is output and P is price of the input | | :LRAC = P x (I / Q), where I is input and Q is output and P is price of the input |