could enter 12 welcome to lesson number seven went from the distinction about students textbook so you have grade 12 2011 and now in this lesson of step by a rising homework with you and it was given comparison between perfect and one body and use 5 of the quantity and cost rights is the activity you can go to this video and microcell now we are going to discuss a revenue and we have when we started the whole topic I started by showing you cost and revenue curves and already you know what TR is what CC is installed so now we want to draw a curve and not a curve a graph for economic profit of monopoly alright so to introduce the lesson this is made of these things we have already been discussing them in previous lessons and so if you want refreshing if you want to refresh your mind as I mentioned many of these things a couple of times looking down a sloping demand curve the monopolist can make a loss if okay many of these things have been discussed in previous lessons you already know what a R is what AC is and so on okay so then in the short run what are the possibilities by the first possibility in the short run is economic profits and how does that happen but this bed is all monopolies so whenever you draw your graphs you must always lever them right so this here is our practice axis and this is our quantity axis but this here is our D is equal to a and here is now and you see that now we have our marginal cost curve remember so this is our MC where our MC meet our mr does the profit maximizing output is either so let's say 10 now many lemons make this mistake when they draw when they meet the profit maximizing point they then say this is the price which is a big big mistake so where is our price crisis determined by demand so we have to continue with our line and most in most cases this man should be a dotted line but it's difficult for me to draw it as because you see it's difficult so I have to continue my life until high tides and demand curve and so this becomes the price for whatever it is that the monopoly is producing so I would say maybe eight right so adroitly is our packs now the question is how can a firm make economic any does that when it's average revenue is greater than its average cost so when you get more than you it costs you to make whatever it is that you make it you make an economic profit so it means I have to draw an average cost curve now where do I place that curve I have to place it below the HPA our so our AR is naked eight so my 8c has to be you know something below I can't Philippe I can't put it there because it becomes something else so I have to draw it anyway below my AC my are so look at my AC ladies and this becomes something like okay we presents my economic profit so this is my economy voice now how can we prove that we use the formula to get economic profit we say hey R minus AC so what is my arm my arm that's what yeah is a trend - what is my AC my AC is six friends so what do I get I get to remember so in is economic profits so what is the economic profits total economic profit so to get our total profit entire profit will say two rents times two is ten which is 20 so 29 is our total economic profit that the firm is making so that is what we are explaining here so you can pause the video and read this but it's the same thing yeah this goes a mr our MC curve our AC curve do you see that it's below so this whole question here is our economic profit so to draw it like this is even better for you to understand because you can calculate but in this case we have P and Q 1 so when when I'm explaining and I'm saying P is greater than P 1 it may not make as much is a Twitter that sticks you see that all right so there isn't much in this lesson except for surf and repetition but the only thing that's going to change is our HD all right so let me show no more profits let's see if it's not perfect yes it is alright so now I'll write one up on you just like x8 and I'm throwing my price axis and mine went to three X's and I write it in short because it's look it's not as easy as you write them with your pen so when you're writing in an example in Japan you must always write in full price quantity and this is your zero day right make a demand curve down a sloping D is equal to a and for you know to forget to the level of X's make sure the minute you finish drawing a curve you'll ever be dizzy D is equal to 8 then you draw the next curve and like that and then you draw your M C and C and it means our a ever fail so this not take our profit maximizing point is this point [Music] yeah okay let me make it okay we need the 2000 and then I proceed you see up to date until I twice the demand curve then I make up a price let's say ten right now this is we can tell whether the premise making profit or loss at this point until we draw the AC curve so I'm going to throw my AC curve and aim to talk to to make them equal with a table at the profit maximizing output you see that then I drew a level my axis AC before I forget so there's nothing to shake here because our a is equal to r HC let's prove it let's try to prove this so for us to prove it we have to use the formula a R minus HC to see whether if M is making profit or loss so when I ate up my are these 10 Reds and where is my HP my SC is also 10 Reds so 10 minus 10 gives us 0 just like we say in perfect this becomes a normal profit whenever you get 0 is your answer the firm is making economic no more profit so there we have it repeat this the same as what I was explaining right the next thing is this one here economic lots so this is economy loss and our left draw it in explain test so there's our black hand right so we have our price axis we have our quantity axis and we have our demand curve down a sloping D is equal to a R and make try to make it a less inelastic net just try em on and I promise to explain what I mean by that I will with the time constant that our MC and this all profit maximizing output let me say hundred I love hundred net then mid stay so my curve is going to be difficult to draw because of way I made the meet that mean let me make life easy for myself we sweat 20 minutes ok so this is the same way we started with everything else so the money difference comes with the AC curve but I want to put it where it's higher than everything else ok so you see there and we proceed with our profit matter so this must be a straight line straight and it must be 90 degrees do you have a girl in exam room so you can't be drawing lines are not straight all right this is okay so this old question that I'm selling green that's all fortunately it represents economic loss how why are we saying this is economic loss we use the formula a R minus HC weight is how our looking looking it's 20 - where's our AC our XC is that so what is 20 minus 30 is negative 10 right so all right so it's the same thing that we did it perfect so this makes the whole dynamics of perfect and imperfect market very very easy all right so you have less activity 64 now this one is going to be easily you can go back to the first lesson of this dynamics of imperfect market you can see how I calculated those and then you can try to do the same here so it's an activity out of 20 for the video complete thus you see the answers in the next lesson alright thank you so much I'll see you in that lesson