Chapter 14

Chapter 14 goes over Firms in Competitive Markets. First it recaps competitive markets which are basically markets where firms have a negligible impact on the market. If a market is not competitive it is because a firm has market power. It then delves into the revenue of a competitive firm. The chapter introduces to us profit maximization and with that a new line on the graph. A marginal revenue line which stays constant. As long as the firms marginal cost is underneath the marginal revenue it is good  and operating at a benefit and if the marginal cost is above the marginal revenue it is operating at a loss. The maximization of the profits is when the marginal cost and marginal revenue are equal.