1.  What is the relationship between the average product curve and the
average total cost curve

2.   Why might a firm continue to produce in the short run even though the
market price is less than the average total cost

3.   A graph shows the long run equilibrium for an organisation with
MC CURVE
ATC CURVE
MR SLOPE
D=AR SLOPE
with price/cost on y-axis
and output on x-axis
a.  In which market structure is this organisation operating? and why
is this this market structure
b.  Compare the long run quantity and price to those of a perfectly
competitive firm.  What accounts for the difference?

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Request for Question Clarification by kyrie26-ga on 01 Sep 2002 20:59 PDT

Hi makbool-ga,

For Part 3, am I correct on what the acronyms stand for :
MC = Marginal Cost?
ATC = Average Total Cost?
MR = Marginal Revenue?

... what is D=AR?

... what does the graph look like? Even if I am aware of what curves
are in this graph, I need to see the exact placement of these curves.
Is there an online image you can show us?


Thanks in advance,

kyrie26-ga

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Clarification of Question by makbool-ga on 02 Sep 2002 01:51 PDT

Hi there

D = demand
AR =  average revenue
unfortunately I could not locate this graph on-line

I will try me best to explain you the graph

MR is sloping downwards to the right this slope is below the slope of 
D = AR
MC intersects independently with ATC, D = AR and MR 
The intersection of MC & MR is below MC & ATC intersection
ATC touches the D=AR (sloping downwards to the right) 
The intersection of MC & ATC is above the MC & D = AR slope
The intersection of MC & D = AR is in between the MC & ATC
intersection and MC & MR curve.

I hope this clarifies your request.

thanks 
makbool-ga

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Clarification of Question by makbool-ga on 02 Sep 2002 01:54 PDT

Hello again 

sorry I forgot to confirm the acronyms  =  yes you are correct

regards