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ADVERTISING: Information provided about a product by a company to promote or maintain sales, revenue, and or profit. Advertising is often an explicit method of signalling that sellers use to provide information to buyers. The primary objective of advertising from the sellers perspective is to increase (or at least maintain) demand for a product. To accomplish this objective advertising provides buyers with two important types of information -- prices and product quality.

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Lesson 16: Perfect Competition | Unit 3: Doing Graphs Page: 16 of 28

Topic: Short-Run Alternatives <=PAGE BACK | PAGE NEXT=>

  • The three alternatives for short-run production facing a perfectly competitive firm are:

    • P > ATC: Total revenue exceeds total cost and the firm receives a positive economic profit. In this case, a firm maximizes profit by producing the quantity of output that equates marginal revenue and marginal cost.

    • ATC < P > AVC: Total revenue falls short of total cost, meaning the firm incurs an economic loss (or negative economic profit). In spite of the loss, because the price exceeds average variable cost, the firm can maximize profit (minimize loss) by producing the quantity of output that equates marginal revenue and marginal cost.

    • P < AVC: Total revenue also falls short of total cost, and the firm incurs an economic loss (or negative economic profit). In this case the firm maximizes profit (that is, minimizes loss) by reducing the quantity of output to zero.


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FOUR ESTATES

A division of society based on the economic functions of consumption, production, regulation, and information that includes governments as the first estate, businesses as the second estate, consumers as the third estate, and journalists as the fourth estate.

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Today, you are likely to spend a great deal of time searching the newspaper want ads looking to buy either several magazines on fashion design or a package of 3 by 5 index cards, the ones without lines. Be on the lookout for poorly written technical manuals.
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Junk bonds are so called because they have a better than 50% chance of default, carrying a Standard & Poor's rating of CC or lower.
"Think not of yourself as the architect of your career but as the sculptor. Expect to have to do a lot of hard hammering and chiseling and scraping and polishing. "

-- B. C. Forbes, founder, Forbes magazine

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