Business

1. Perfect Competition
Cost Curve Collection
Slides 2-5 depict a perfectly competitive market and a firm in that market. The progression from slide 2 through 4 show the areas of
total revenue (TR), total cost (TC), and profit.
Slides 6-9 illustrate a decrease in demand and how the new market price reduces TR and causes the firm to operate at a loss. The
decrease drives the price below the ATC of the firm, which decreases total revenue and produces a loss for the firm. The firm is
covering its variable costs and part of its fixed costs.
Slides 10-13 illustrates a further decrease in demand, reducing the price for the firm to a point below the AVC curve. The slides
indicate even greater loss. At this point, the firm will shut down to minimize losses, but it will still be obligated to its fixed costs.
Slides 14-30 could be considered a set. The curves in slides 15-29 are based on the table in slide 14. The table could be printed so
that students would have it handy while viewing the graphs. For best results, print the table in "landscape" orientation.

2. Perfect Competition
D=MR
MC
P
S
D
0
P
The Industry
Q
The Firm
Price Price
Quantity Quantity
Q
ATC
AVC

3. Perfect Competition
D=MR
MC
P
S
D
0
P
The Industry
Q
The Firm
Price Price
Quantity Quantity
Q
ATC
AVC
Total Revenue

4. Perfect Competition
D=MR
MC
P
S
D
0
P
The Industry
Q
The Firm
Price Price
Quantity Quantity
Q
ATC
AVC
Total Revenue
Total Cost

5. Perfect Competition
D=MR
MC
P
S
D
0
P
The Industry
Q
The Firm
Price Price
Quantity Quantity
Q
ATC
AVC
Total Revenue
Total Cost Profit

6. Perfect Competition
MC
S
D
0
The Industry The Firm
Price Price
Quantity Quantity
Q
ATC
AVC
D
1
Q
1
Q
0
P
1
P
0
P D=MR

7. Perfect Competition
MC
S
D
0
The Industry The Firm
Price Price
Quantity Quantity
Q
ATC
AVC
D
1
Q
1
Q
0
P
1
P
0
P
Total Revenue
D=MR

8. Perfect Competition
MC
S
D
0
The Industry The Firm
Price Price
Quantity Quantity
Q
ATC
AVC
D
1
Q
1
Q
0
P
1
P
0
P
Total Revenue
Total Cost
D=MR

9. Perfect Competition
MC
S
D
0
The Industry The Firm
Price Price
Quantity Quantity
Q
ATC
AVC
D
1
Q
1
Q
0
P
1
P
0
P
Total Revenue
Total Cost Loss
D=MR

10. Perfect Competition
D=MR
MC
S
D
0
The Industry The Firm
Price Price
Quantity Quantity
Q
ATC
AVC
D
1
Q
1
Q
0
P
1
P
0
P

11. Perfect Competition
MC
S
D
0
The Industry The Firm
Price Price
Quantity Quantity
Q
ATC
AVC
D
1
Q
1
Q
0
P
1
P
0
P
Total Revenue
D=MR

12. Perfect Competition
MC
S
D
0
The Industry The Firm
Price Price
Quantity Quantity
Q
ATC
AVC
D
1
Q
1
Q
0
P
1
P
0
P
Total Revenue
Total Cost
D=MR

13. Perfect Competition
MC
S
D
0
The Industry The Firm
Price Price
Quantity Quantity
Q
ATC
AVC
D
1
Q
1
Q
0
P
1
P
0
P
Total Revenue
Total Cost
D=MR
Loss

14. Perfect Competition
Quantity
of chairs
per hour
TC FC VC MC AFC AVC ATC
0 30 30 0
1 45 30 15 15.00 30.00 15.00 45.00
2 55 30 25 10.00 15.00 14.50 27.50
3 63 30 33 8.00 10.00 11.00 21.00
4 70 30 40 7.00 7.50 10.00 17.50
5 80 30 50 10.00 6.00 10.00 16.00
6 100 30 70 20.00 5.00 11.67 16.67
7 130 30 100 30.00 4.28 14.28 18.57

15. Perfect Competition
1 2 3 4 5 6 7
10
20
30
40
50
60
70
80
90
100
110
Costs in $s
Quantity (chairs per hour)

16. Perfect Competition
1 2 3 4 5 6 7
10
20
30
40
50
60
70
80
90
100
110 TC
TC=Total Cost
Costs in $s
Quantity (chairs per hour)

17. Perfect Competition
1 2 3 4 5 6 7
10
20
30
40
50
60
70
80
90
100
110 TC
TC=Total Cost
Costs in $s
Quantity (chairs per hour)

18. Perfect Competition
1 2 3 4 5 6 7
10
20
30
40
50
60
70
80
90
100
110
FC
TC
FC=Fixed Cost
TC=Total Cost
Costs in $s
Quantity (chairs per hour)

19. Perfect Competition
1 2 3 4 5 6 7
10
20
30
40
50
60
70
80
90
100
110
FC
TC
FC=Fixed Cost
TC=Total Cost
Costs in $s
Quantity (chairs per hour)

20. Perfect Competition
1 2 3 4 5 6 7
10
20
30
40
50
60
70
80
90
100
110
FC
VC
TC
FC=Fixed Cost
VC=Variable Cost
TC=Total Cost
Costs in $s
Quantity (chairs per hour)

21. Perfect Competition
1 2 3 4 5 6 7
10
20
30
40
50
60
70
80
90
100
110
FC
VC
TC
FC=Fixed Cost
VC=Variable Cost
TC=Total Cost
Costs in $s
Quantity (chairs per hour)

22. Perfect Competition
1 2 3 4 5 6 7
10
20
30
40
50
60
Costs in $s
Quantity (chairs per hour)

23. Perfect Competition
1 2 3 4 5 6 7
10
20
30
40
50
60
MC
MC=Marginal Cost
Costs in $s
Quantity (chairs per hour)

24. Perfect Competition
1 2 3 4 5 6 7
10
20
30
40
50
60
MC
MC=Marginal Cost
Costs in $s
Quantity (chairs per hour)

25. Perfect Competition
1 2 3 4 5 6 7
10
20
30
40
50
60
AFC
MC
AFC=Average Fixed Cost
MC=Marginal Cost
Costs in $s
Quantity (chairs per hour)

26. Perfect Competition
1 2 3 4 5 6 7
10
20
30
40
50
60
AFC
MC
AFC=Average Fixed Cost
MC=Marginal Cost
Costs in $s
Quantity (chairs per hour)

27. Perfect Competition
1 2 3 4 5 6 7
10
20
30
40
50
60
AFC
AVC
MC
AFC=Average Fixed Cost
AVC=Average Variable Cost
MC=Marginal Cost
Costs in $s
Quantity (chairs per hour)

28. Perfect Competition
1 2 3 4 5 6 7
10
20
30
40
50
60
AFC
AVC
MC
AFC=Average Fixed Cost
AVC=Average Variable Cost
MC=Marginal Cost
Costs in $s
Quantity (chairs per hour)

29. Perfect Competition
1 2 3 4 5 6 7
10
20
30
40
50
60
AFC
AVC
ATC
MC
AFC=Average Fixed Cost
AVC=Average Variable Cost
ATC=Average Total Cost
MC=Marginal Cost
Costs in $s
Quantity (chairs per hour)