In the previous topic, we showed that P = MR = D = $5 and is constant at every level of Q; thus, the demand curve is horizontal.
[Note: What's the shape (slope) of TR? You need to know this as well.]
Christian,
We'll put all these graphs on the scanner soon. Until then, just visualize the following in your mind. -- Love, mom
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The fundamental rule of profit-maximization is probably the most important function you'll learn this semester! It applies to all four market structures. Let's prove it's validity here.
Questions first:
1. Draw the MR curve and the TR curve on two different graphs.
2. What is the slope of TR called?
3. What is the definition of (economic) profit?
4. What is the slope of TC called?
5. Describe its shape.
6. Draw the TC curve on the same graph as the TR curve.
7. What do you notice?
More to follow.
