Sunday, April 01, 2012
Daily Review -- Perfect Competition
In the graph to the right, determine the price the perfect competitor will charge, and the profit. For those who like to color, color the area of profit green.
My answers are: the price is $4 producing a quantity of 6 for a total revenue of $24. The profit the firm ears is $6.
In a perfectly competitive market no firm has pricing power so they can't influence the market price. The firm does not consider the actions of its rivals when making a quantity decision.
This graph was made using my Bamboo tablet. I still need to master the medium.
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