Given P = 15, should the firm shutdown?
P has to be less than Min Average Variable Cost for the firm to shut down
VC = TC - FC
| Q (given) | TC | VC | FC | AVC |
|---|---|---|---|---|
| 0 | 30 | 0 | 30 | 0 |
| 1 | 50 | 20 | 30 | 20 |
| 2 | 65 | 35 | 30 | 17.5 |
| 3 | 75 | 45 | 30 | 15 |
| 4 | 90 | 60 | 30 | 15 |
| 5 | 110 | 80 | 30 | 16 |
| 6 | 140 | 110 | 30 | 18.3 |
AVC = VC / Q
Market Structure: Monopoly vs Oligopoly etc…
| Market Structure | Firms | Product Type | Market Power | Barriers to Entry | Example |
|---|---|---|---|---|---|
| Perfect Competition | Many | Identical | None | None | Agriculture |
| Monopolistic Competition | Many | Differentiated | Some | Low | Restaurants |
| Oligopoly | Few | Differentiated or identical | High | High | Car industry |
| Monopoly | One | Unique | Very high | Very high | Electricity utility |
| Duopoly | Two | Similar or identical | High | High | Coke vs Pepsi |