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THE THEORY OF THE FIRM UNDER PERFECT COMPETITION - Coggle Diagram
THE THEORY OF THE FIRM UNDER PERFECT COMPETITION
FEATURES
Free entry & free Exit
Perfect information
Homogeneous product
Price taking behaviour
Large no. of buyers &sellers
REVENUE
AR=TR/Q
MR=∆TR/∆Q
TR=PXQ
PROFIT MAXIMISATION Ꙥ=TR-TC
MC NON DECLINING AT qₒ
P≥AVC IN Short run P≥LRAC IN Long run
P=MC
SUPPLY CURVE OF A FIRM
Short run supply curve
Long run supply curve
The Shutdown point The Normal profit point and the break even point
Determinants of a Firm's Supply curve
Technological progress
Input Prices
Unit tax
Market Supply curve
Price Elasticity of Supply Es=∆Q/∆p x p/Q
