166 Outcome: Profit and Losses in a Perfectly Competitive Market

What you’ll learn to do: measure variable and total costs as the area under the average variable and average total cost curves

In this outcome, you will analyze how perfectly competitive firms make output decisions about how much to produce. You’ll look closer at a firm’s cost curves to determine if a firm can afford to stay in business when prices are determined for them.

The specific things you’ll learn in this section include:

• Measure total revenues as the area under the average revenue curves
• Calculate and graphically illustrate profit and losses for a perfectly competitive firm

LEARNING ACTIVITIES

The learning activities for this section include:

• Reading: Profits and Losses with the Average Cost Curve
• Simulation: Maximizing Profit
• Self Check: Profit and Losses in Competitive Markets

Take time to review and reflect on each of these activities in order to improve your performance on the assessment for this section.