MR D = AR

ATC

MC

Price and costs

Quantity of Output

ATC

MC

Figure 1: Cost Curves and Abnormal Profit

ATC

MC

Price and costs

Quantity of Output

AVC

ATC

MC

Figure 2: Cost Curves and Break Even/Shut Down

Break even

Shut down

Ave

rage

Tot

al C

ost

Quantity of Output

Figure 3: Dis/Economies of Scales and LRATC/SRATC

LRATC

ATC1

ATC2

ATC3

ATC4 ATC5 ATC6

ATC7

ATC8

constant returns to scale

economies of scale

(increasing returns

to scale)diseconomies of scale

(decreasing returns to

scale)

Price

Quantity

Inelastic

Elastic

Figure 4: Kinked Demand Curve

Stable

Q1

P 1