Enable Java on your computer to use this applet. I'm deliberately switching back and forth between marginal cost and average cost, to better bring out the distinction between them. Average cost tells you if you are making or losing money. Marginal cost doesn't tell you that, but it does tell you how to increase or decrease your profit. Effect of new entry into the market Suppose that new firms, attracted by the easy profit, enter the home care industry in Joan's area.
More firms try to serve more patients.
Enable Java on your computer to use this applet. Enable Java on your computer to use this applet. The profitable output range shrinks as the price falls. As the price falls, Joan's leeway is reduced. There is a range of correct answers.