What you’ll learn to do: calculate and graph the firm’s fixed, variable, average, marginal and total costs
In this section, you will learn how to analyze the cost and revenue curves related to monopolistically competitive firms and use these graphs to determine the best price and quantity for a firm’s product.
Here are some of the specific things you’ll learn to do in this section:
- Measure variable and total costs as the area under the average variable and average total cost curves
- Calculate and graph the firm’s average, marginal and total revenues;
- Measure total revenues as the area under the average revenue curves
- Determine the profit maximizing output level and price; is able to calculate and graphically illustrate where marginal revenue equals marginal costs
- Calculate and graphically illustrate profit and losses for a monopolistically competitive firm
The learning activities for this section include the following:
- Reading: Choosing Price and Quantity
- Self Check: Calculating Cost, Revenue, Profit and Losses
Take time to review and reflect on each of these activities in order to improve your performance on the assessment for this section.