-Is the demand curve for a perfective competitive firm also it’s MR curve? Also is MC curve in for a perfective competitive firm it’s supply curve? -Why is the ATC curve for a Monopoly a downward sloping curve and not a U shaped curve? Thanks in advance…
Under perfect competition, demand and MR are the same, i.e. both are straight lines at the height of the price on the graph. The supply curve is the MC curve when the latter is above the minimum ATC and zero otherwise. The ATC curve of a NATURAL MONOPOLY ``can be assumed’’ to be downward sloping if this monopoly is due to the occurence of a huge fixed cost to set up the business (hydro-electric production). Otherwise, monopolies have U-shaped ATC curves.
For a perfectly competetive firm, the demand curve would be the same as the MR curve because it cannot influence the price and takes whatever price it gets. Correct? It’s supply curve would equal the MC curve when MC>ATC because if the firm sells at the ATC the it would making a loss on that unit. What is the supply curve when ATC>MC? Is it the ATC curve then? Thanks a lot!
the supply curve is equal to the MC curve when MC>= ATC When MC= min AVC.