AP Economics – 11/12/18

I.  Bellwork

The market for gizmos is perfectly competitive and firms are earning short-run positive profits.

1. Draw correctly labeled side-by-side graphs of the market for gizmos and the profit-maximizing output of a typical gizmo producer.
2. Identify the market output as Qm and the market price as Pm.
3. Identify the firm’s output as Qf and the firm’s price as Pf.

iii. Identify the area that corresponds to positive profit.

1. Assume the market for gizmos is a constant cost industry. In the long run, how will the following change?
2. The number of gizmo producers in the market.
3. The price of gizmos.

II.  Objectives:

• Construct and Interpret graphs for perfectly competitive industries and firms demonstrating the long run and short run impact based upon changes in supply and demand
• Differentiate between  cost-constant, increasing cost, decreasing cost industry.

III Discussion

• PPT 3.6 Long Run Cost-constant, Increasing cost, and Decreasing cost industry.
• 60.4 graphing practice
• Allocative efficiency = ( Price(marginal benefit)=MC)
• Productive Efficiency = (Price (MR) = Minimum point of ATC) cost minimized

IV.  Homework

• Page 612 Check Your Understanding 1-2
• Page 612-613 Tackle the Test 1-6

AP Economics