Chapter Introduction
MODULE 59
Graphing Perfect Competition
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In this Module, you will learn to:
Evaluate a perfectly competitive firm’s situation using a graph
Determine a perfectly competitive firm’s profit or loss
Explain how a firm decides whether to produce or shut down in the short run
We have just learned that for a perfectly competitive firm, a comparison of the market price to the firm’s average total cost determines whether the firm is earning a profit, taking a loss, or breaking even with a normal profit of zero. Now we can evaluate the profitability of perfectly competitive firms in a variety of situations.