Economics HL
4
Chapters
117
Notes
Unit 1 - Intro To Econ & Core Concepts
Unit 2 - Microeconomics
Unit 3 - Macroeconomics
Unit 4 - The Global Economy
Economics HL
Unit 2 - Microeconomics
Understanding Perfect Competition Decoding Market Dynamics
661 words
4 mins read
Last edited on 5th Nov 2024
Table of content
Price takers- no haggling allowed! 💰
- Firms can't change the price. It's like a dollar store – everything's a dollar, no matter what.
- You can't charge higher because others are selling at the market price. It's like trying to sell ordinary water for $5 when everyone else sells it for $1.
- Selling at a lower price? No reason to, you can sell all you want at the market price. Why sell cookies for $2 when everyone buys them at $3?
Quinoa party with felipe- an example of perfect competition 🌾
- Meet Felipe, the quinoa seller. He sells his quinoa at the market price, P.
- He knows that consumers will buy all the quinoa he offers at that price.
- His Average Revenue (AR) and Marginal Revenue (MR) are all the same and equal to P.
How felipe maximizes his profits 🚀
- Felipe chooses to sell q* units, where MR = MC (Marginal Revenue = Marginal Cost). It's like finding the perfect number of pizzas to sell that maximizes your earnings.
- If his AR (Average Revenue) is greater than his ATC (Average Total Cost), he makes positive economic profits. Think of it as selling candy bars for $1 when it costs 50 cents to make them – pure profit!
Unlock the Full Content! 
Dive deeper and gain exclusive access to premium files of Economics HL. Subscribe now and get closer to that 45 🌟
Economics HL
Unit 2 - Microeconomics
Understanding Perfect Competition Decoding Market Dynamics
661 words
4 mins read
Last edited on 5th Nov 2024
Table of content
Price takers- no haggling allowed! 💰
- Firms can't change the price. It's like a dollar store – everything's a dollar, no matter what.
- You can't charge higher because others are selling at the market price. It's like trying to sell ordinary water for $5 when everyone else sells it for $1.
- Selling at a lower price? No reason to, you can sell all you want at the market price. Why sell cookies for $2 when everyone buys them at $3?
Quinoa party with felipe- an example of perfect competition 🌾
- Meet Felipe, the quinoa seller. He sells his quinoa at the market price, P.
- He knows that consumers will buy all the quinoa he offers at that price.
- His Average Revenue (AR) and Marginal Revenue (MR) are all the same and equal to P.
How felipe maximizes his profits 🚀
- Felipe chooses to sell q* units, where MR = MC (Marginal Revenue = Marginal Cost). It's like finding the perfect number of pizzas to sell that maximizes your earnings.
- If his AR (Average Revenue) is greater than his ATC (Average Total Cost), he makes positive economic profits. Think of it as selling candy bars for $1 when it costs 50 cents to make them – pure profit!
Unlock the Full Content!
Dive deeper and gain exclusive access to premium files of Economics HL. Subscribe now and get closer to that 45 🌟
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