ECO101H1 Chapter Notes - Chapter 14: Average Variable Cost, Marginal Revenue, Profit Maximization
![ECO101H1 Full Course Notes](https://new-docs-thumbs.oneclass.com/doc_thumbnails/list_view/2229634-class-notes-ca-utsg-eco-101h1-lecture17.jpg)
98
ECO101H1 Full Course Notes
Verified Note
98 documents
Document Summary
Competitive market a market in which there are many buyers and sellers so that each has a negligible impact on the market price. Marginal revenue the change in total revenue from an additional unit sold. Sunk cost a cost that has already been committed and cannot be recovered. Characteristics: there are many buyers and sellers in the market, the goods offered by the various sellers are largely the same, firms can freely enter the market. Total revenue is proportional to the amount of output. How much revenue does the seller receive from the typical unit? : average revenue, for all firms, average revenue = price of the good. How much additional revenue does the seller receive if it increases production by 1 unit? : marginal revenue, for competitive firms, marginal revenue = price of the good. To find profit maximizing quantity: compare marginal revenue and marginal cost from each unit produced.