Production, Cost, and the Perfect Competition Model

TR = Q / P.

TR = P - Q.

TR = P * Q.

TR = P + Q.

Companies would reduce their supply due to higher costs associated with increased demand.

Each firm would decrease their prices while maintaining current production levels.

Producers would keep both prices and outputs unchanged anticipating future shifts back towards original demand conditions.

Firms would likely increase their production levels in response.

Perfect competition

Oligopoly

Monopolistic competition

Monopoly

Consumer goods become cheaper due to increased efficiency in capital goods production.

Immediate profits will definitely rise compared to investing in consumer goods.

Future consumption possibilities may increase at the expense of current consumption satisfaction.

Capital goods will depreciate faster due to rapid technological advancements.

Total revenue will decrease significantly.

An initial increase followed by a decrease as consumers adjust to new prices over time.

There is no impact on total revenue with price changes for products with inelastic demand curves.

Total revenue will increase.

When marginal product is decreasing, total product increases at a increasing rate.

When marginal product becomes zero, total product increases.

When marginal product is increasing, total product increases at an increasing rate.

When marginal product becomes negative, total product is increasing.

Monopoly

Oligopoly

Monopolistic Competition

Perfect Competition

No change in marginal cost.

Increase in average variable cost.

Decrease in average total cost.

Increase in fixed cost.

Prioritize short-term gains through aggressive pricing strategies, effectively undermining competitors' profitability for eventual acquisition and consolidation purposes, thereby strengthening own brand positioning in the marketplace.

Focus on differentiation and adding value to the services and products offered to create a unique customer experience that makes it difficult for rivals to replicate quickly enough to catch up to the dominant position gained.

Balance investment in technological advancements against the potential loss of consumer goodwill due to job displacement concerns, leading to decreased demand in the overall sector.

Evaluate the relative elasticity of substitute goods, determining the appropriate pace of innovation to ensure not to outpace the ability of consumers to adapt usage patterns accordingly, keeping the business on a sustainable growth trajectory.

Average fixed cost

Marginal cost

Total variable cost

Average variable cost