Perfect competition - The short-run condition for profit maximization
3 important questions on Perfect competition - The short-run condition for profit maximization
The total revenue curve in the short run is:
The ray whose slope is equal to the product price.
The short-run supply curve of the perfectly competitive firm is defined by two rules:
- Price must be equal to marginal cost on a rising portion of the marginal cost curve
- Price must exceed the minimum value of the average variable cot curve
The shutdown condition for a perfectly competitive firm in the short run is:
If price falls below the minimum of average variable cost, the firm should shut down in the short-run.
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