Production, Cost, and the Perfect Competition Model

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.

TR = Q / P.

TR = P - Q.

TR = P * Q.

TR = P + Q.

No change in marginal cost.

Increase in average variable cost.

Decrease in average total cost.

Increase in fixed cost.

Doubling inputs perfectly doubles output.

Production more than doubles when inputs are doubled.

Doubling inputs has no effect on output.

Production less than doubles when inputs are doubled.

Opportunity cost

Implicit cost

Fixed cost

Variable cost

Output decreases as more units of a variable input are added.

Marginal product becomes negative immediately after diminishing returns occur.

Output increases at a decreasing rate as more units of a variable input are added.

Total costs become constant regardless of output levels.

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.

Monopoly

Oligopoly

Monopolistic Competition

Perfect Competition

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.

Labor

Capital

Energy consumption

Raw materials