Okay - a few more links, and some brain teasers for you.
Here is the PC side by side graphs we used today in class: http://www.reffonomics.com/perfectcompetition2.html
PC and an increase in D:
Entry and Exit in PC:
Shut Down rule:
Here's part of an online textbook on PC:
And here is another online text that could help - there are chapter notes, possible overheads, and an online quiz:
And some questions to think about:
1. The licorice industry is competitive. Each firm produces 2 million strings of licorice in a year. The strings have an average total cost of $.20 each, and they sell for $.30. (a) What is the marginal cost of a string? (b) Is this industry in long run equilibrium? Why or why not?
2. Bob's lawn mowing service is a profit-maximizing, competitive firm. Bob mows lawns for $27 each. His total cost each day is $280, of which $30 is a fixed cost. He mows 10 lawns a day. What can you say about Bob's short run decision regarding shut down and his long run decision regarding exit from the market?
3. Your best friend's long hours in the chemistry lab have finally paid off - she discovered a secret formula that allows people to do an hour's worth of studying in 5 minutes. So far, she's sold 200 doses, and faces the following ATC schedule: (Q--ATC) 199 -- $199, 200 -- $200, 201 -- $201. If a new customer offers to pay your friend $300 for one dose should she make one more? Explain.
Have a nifty weekend! :)