Micro 3.7A Perfect Competition in the Short Run

This video covers topic 3.7 of the AP Microeconomics Course Exam Descriptions (CED). This video covers qualities of perfectly competitive firms, profit maximization, how to draw profit, loss, or breaking even, and how to find the profit maximizing quantity.
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I would like to acknowlege the work of Dick Brunelle and Steven Reff from Reffonomics.com who’s work inspired many of the review games on ReviewEcon.com. I would also like to thank Francis McMann, James Chasey, and Steven Reff who taught me how to be an effective AP Economics teacher at AP summer institutes; as well as the countless high school teachers, and college professors from the AP readings, economics facebook groups, and #econtwitter.

[@arshia4353]

when you say there are low barriers to entry does that also mean theres a low minimum efficient scale that these companies have to meet?

[@ReviewEcon]

No, barriers to entry are about how hard it is to enter (or exit) the market. Barriers to entry are things like high startup costs, customer loyalty, availability of resources, government regulations, etc.
For the purposes of the AP exam, minimum efficient scale is in reference to the long run average total cost curve. Minimum efficient scale is the lowest quantity where the ATC is at its minimum.
I hope that helps!

[@arshia4353]

@@ReviewEcon It does thank you!

[@Mouath99]

Hello, can i ask a question, what do you mean by all decisions are made at the margin?

[@ReviewEcon]

All decisions is a stretch, but on the AP exam, marginal decision making is a focus.
It means most decisions aren't all or nothing but a matter of how much, where you compare the MC and MB of each unit. So it's not "will a city have parks or not?", rather it's "how many parks will a city have?". It's not "will you study?", rather "how much will you study?".

[@andrewmacdonald5367]

🔥🔥🔥🔥🔥🔥🔥🔥🔥

[@ReviewEcon]

Thank you! 😄

[@d5tr0n6]

how did you know the avc is $6?

[@ReviewEcon]

I'm not sure which point in the video you're referencing. Can you point me to a time?

[@d5tr0n6]

@@ReviewEcon my bad i didnt know if it was calculated or arbitrary in the variable cost of the last example… I like the review sheet wish it had more on free trade and commons but im understanding graphs now