2. Balance of payments. At the equilibrium point, the average income of E2 firms is equal to the average total cost. The manufacturer has neither profit nor loss. This is also called the break-even point of the manufacturer. ?
3. loss. At the equilibrium point, the average profit of E3 manufacturers is less than the average total cost. However, because the average profit AR of the manufacturer is greater than the average variable cost AVC of the output in the third quarter, the manufacturer continues to produce despite the loss. ?
4. Critical point. At the equilibrium point E4, the average profit AR of the manufacturer is equal to the average variable cost AVC. The manufacturer may or may not produce. At this equilibrium point, the manufacturer is at the critical point of closing the enterprise, so the equilibrium point is also called the stopping point or closing point. ?
5. Stop production. At the equilibrium point, the average profit AR of E5 manufacturers is less than the average variable cost AVC. In this loss situation, the total income of the manufacturer can't make up for the variable cost. The more production, the greater the loss. Only by reducing the variable cost to zero, the loss will be minimal, so the manufacturer will stop production.
Extended data
First, short-term equilibrium
1. In a short period of time, perfectly competitive manufacturers can achieve MR=SMC by adjusting their output at a given production scale. ?
2. According to perfect competition MR=SMC, the equilibrium point of maximizing the profit of the manufacturer is the intersection point E of MR curve and SMC curve, and the corresponding equilibrium output is Q'. On the output of Q', the average income is EQ' and the average cost is F Q. Since the average revenue is greater than the average cost, the manufacturer gains a profit (shaded part in the figure).
3. The manufacturer's demand curve D is tangent to the lowest point of SAC curve, which is the intersection of SAC curve and SMC curve, and also the equilibrium point E of profit maximization, with MR=SMC. In the equilibrium output q', the average profit is equal to the average cost, and the manufacturer's profit is zero. This balance point is called the manufacturer's break-even point.
Second, long-term equilibrium.
1. Under the condition of completely competitive market price, the adjustment of all production factors by manufacturers in long-term production can be manifested in two aspects, on the one hand, the choice of optimal production scale, on the other hand, the decision to enter or exit an industry. ?
2. The manufacturer's choice of the optimal production scale assumes that the perfectly competitive market price is P ... In the short term, due to the given production scale, the manufacturer can only choose the optimal output Q 1 under the given SAC 1 and SMC 1, and the profit is a small shadow area according to the equilibrium condition of maximizing short-term profit.
3. In the long run, according to the equilibrium condition of maximizing the long-term profit, MR=LMC, the manufacturer will reach the long-term equilibrium point E2, and choose the optimal production scale represented by SAC2 and SMC2 curves to produce, so as to obtain the profit with larger shadow area.
4. When a manufacturer enters or exits an industry in the long-term production, the factors of production will always flow to the industry that can get the most profit, and will always flow out of the loss-making industry, so that the profit of a completely competitive manufacturer in the long-term equilibrium is zero.
Baidu encyclopedia-completely competitive market