BIOCH498 Lecture Notes - Lecture 15: Oligopoly, Monopolistic Competition, Marginal Revenue

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Under atc curve = loss/profit of firm. Mc = c / q= vc/ q (if fc/q = 0 then it"s = vc/q) Suppose a firm has only one variable input = labor. Vc = wage rate x labor (everything else will be a fc in this special case) Mc = w l / q. Follows law of diminishing marginal returns = reversed checkmark curve. If mc > atc, atc is rising (margin pulling average up) If mc < atc, atc is falling (margin pulling average down) If mc = atc, atc is at its minimum. Costs in the long run (refer to graphs in book) We can change everything in the long run, not a problem for us. We change everything except the size of our facility. Long run average cost = long run variable cost. If output doubles, costs increase less than double.

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