00:01
So here we're talking about competition and to in a competitive world, firms behave by to attempt to maximize profit by setting price equal to marginal cost.
00:13
So if i look at the graph that we've been provided with here between price and quantity, we see first of all, that the price is 15, right? this demand is equal to the price.
00:25
And the idea is that doesn't matter how much the individual firm produces, they don't affect the world price or the market price.
00:32
So if you look at the marginal cost, the intersection with the price is 30.
00:37
So this will imply that the individual firm chooses a quantity of 30.
00:42
And now to see that there's profit, right, we compare average total cost.
00:48
So average total cost looks something like this.
00:53
So here you see that the firm is making losses...