The Perfect Competition application first draws and explains the origins of (a) the average cost curve, (b) the marginal cost curve, (c) the demand curve, and (d) the marginal revenue curve.

Model Link:  Perfect Competition
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Printable PDF Exercises

Q: When is MC is above AC, below AC, and equal to AC?

The next step is to find the profit-maximizing position.  You adjust the quantity produced manually to see first-hand how a firm facing a horizontal demand curve maximizes profits by producing where the marginal cost equals the market price.  You then use a built-in iterative procedure to automatically maximize profits.

Movie:  Perfect Competition
      (40 seconds)

To illustrate the behavior of the firm in a changing environment, you study how the profit maximizing quantity changes when changes in technology shift the average cost and marginal cost curves.

 

Classic Economic Models

    Contents

Microeconomics

Introduction
    Overview of Micro Models

Supply and Demand
    Basic Supply and Demand
    Who Pays a Sales Tax?
    The Cobweb Model and
        Inventory-Based Pricing

Theory of the Firm
    Perfect Competition
    Monopoly and
        Monopolistic Competition
    Price Discrimination
    The Demand for Labor

Theory of the Consumer
    Two Goods - Two Prices
    Intertemporal Substitution
    Labor Supply, Income Taxes,
        and Transfer Payments

Macroeconomics

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    Overview of Macro Models

Models in Chronological Order
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    The Simple Keynesian Model
    The Keynesian IS/LM Model
    The Mundell-Fleming Model
    Real Business Cycles
    The IS/MP Model
    The Solow Growth Model

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    Mean-Variance Analysis:
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