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ECONOMICS
producers equilibrium
Question | Answer |
---|---|
how do you reach producers equilibrium | by maximizing the difference between revenue and cost, when this difference is maxed profit is also maximized |
what is the difference between accounting and economic profits | economic profit counts both implicit and explicit cost accounting profit counts only explicit cost |
when does a producer earn abnormal profits | TR>TC TR/Q>TC/Q AR>AC |
when does a producer earn normal profits | TR=TC TR/Q=TC/Q AR=AC |
when does a producer earn sub-normal profits | TR<TC TR/Q<TC/Q AR<AC |
what are the conditions for producer equilibrium | 1)MR=MC 2)MC should be rising when MR=MC 3)AR>OR = AVC |
draw the diagram of a producer in equilibrium and write its observations | done in note book |