Figure 9.5 Price, Marginal Revenue, and Demand A perfectly competitive firm faces a horizontal demand curve at the market price Here, radish grower Tony Gortari faces demand curve d at the market price of $0.40 per pound He could sell q1or q2— or any other quantity—at a price of $0.40 per pound More generally, we can say that any perfectly competitive firm faces a horizontal demand curve at the market price We saw an example of a horizontal demand curve in the chapter on elasticity Such a curve is perfectly elastic, meaning that any quantity is demanded at a given price Economic Profit in the Short Run A firm’s economic profit is the difference between total revenue and total cost Recall that total cost is the opportunity cost of producing a certain good or service When we speak of economic profit we are speaking of a firm’s total revenue less the total opportunity cost of its operations Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 480