07+Perfect+Competition

A beginning diagram is shown below.



The initial diagram shows an ATC curve and a Demand Curve.. Add a new layer. To the grid add a MC curve and label the profit maximizing quantity the firm will produce. Add another layer, draw and label the rectangle representing positive economic profits. Upload the completed diagram to this Wiki page, then in the explanation field explain how to calculate the dollar amount of the profits you have diagrammed.

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 * Num || Name || Diagram ||  ||
 * 1 || Sally Smith

The pink line is the Marginal cost(MC) curve. it intersects the demand curve at (63,6). Total cost (TC) = Quantity X Average total cost (ATC). At the point of (63,4) it is the lowest price that the firm makes profit. ||  || ||
 * 2 || John Doe

From the initial graph we are given quantity, average total cost (ATC) and demand which equals marginal revenue. In order to calculate marginal cost (MC) we first have to figure out the total cost (TC). Knowing the formula for ATC to be ATC=TC/q we can manipulate and simplify this formula to read ATC x q = TC, this is done by multiplying both sides by q.Once we have the total cost for all quantities we can then proceed to calculate MC which is MC= change TC/ change q. MC is depicted by the red curve on my graph. The profit maximization quantity for this firm is 54 units. The marginal cost at 54 is $5.20. if the ATC and the quantity produced is less than the market price in this case $6 then the firm is making a profit. At 63 units the firms MC is $8.40 ||  ||
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