Principles of Microeconomics / Unit 7 MIC 0610 short lesson, about 20 seconds
Reading Profit Against Average Total Cost
Captions available
The idea
At the chosen quantity, compare price with average total cost: above means profit, equal means zero economic profit, below means a loss. Profit is the gap times the quantity.
In practice
A rectangle from the price down to average cost, as wide as the output.
Where people slip
Measure the gap at the chosen quantity, not at the bottom of average cost; the two rarely coincide.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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