Changes

== Review:  Cost Measures==

== Review:  Cost Measures==

Consider Figure B to the right.  In order to master economics, develop of habit of asking yourselves what you would do if you were the owner of a firm with these costs.  Ask yourself:  if your output is selling at a price of P₁, are you making a profit?<ref>No.</ref>  Should you stay in business?<ref>No, because the price is less than both AVC and ATC.</ref>

Consider Figure B to the above right.  In order to master Economics, develop of habit of asking yourselves what you would do if you were the owner of a firm with these costs.  Ask yourself:  if your output is selling at a price of P₁, are you making a profit?<ref>No.</ref>  Should you stay in business?<ref>No, because the price is less than both AVC and ATC.</ref>

Next consider if your output is selling at a price of P₂.  Are you making a profit there?<ref>You are making a daily profit because P>AVC, but losing money when all your fixed costs are included because P<ATC.</ref>  Should you stay in business?<ref>Yes, because P>AVC so you are making a marginal profit, but not covering all your original costs.</ref>

Next consider if your output is selling at a price of P₂.  Are you making a profit there?<ref>You are making a daily profit because P>AVC, but losing money when all your fixed costs are included because P<ATC.</ref>  Should you stay in business?<ref>Yes, because P>AVC so you are making a marginal profit, but not covering all your original costs.</ref>

==Assignment==

==Assignment==

Read, and reread as needed, the above lecture.  Then answer 6 out of 7 questions below, which use many concepts from the entire course:

Read, and reread as needed, the above lecture.  Then answer 6 out of 7 questions below:

1.  A monopoly is one seller without an competitors.  What is a "monopsony"?

1.  A monopoly is one seller without an competitors.  What is a "monopsony"?