曼昆经济学原理Chapter14.pptVIP

Supply Curve Long run Firms can enter and exit the market If P ATC – firms make positive profit New firms enter the market If P ATC – firms make negative profit Firms exit the market Process of entry and exit ends when Firms in market make zero profit (P = ATC) Each firm produces at efficient scale (P= MC = ATC) Long run supply curve – perfectly elastic Horizontal at minimum ATC * ? 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Figure 7 * ? 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Long-Run Market Supply Price In the long run, firms will enter or exit the market until profit is driven to zero. As a result, price equals the minimum of average total cost, as shown in panel (a). The number of firms adjusts to ensure that all demand is satisfied at this price. The long-run market supply curve is horizontal at this price, as shown in panel (b). Quantity (firm) 0 (a) Firm’s Zero-Profit Condition MC ATC Price Quantity (market) 0 (b) Market supply P= minimum ATC Supply Supply Curve Why do competitive firms stay in business if they make zero profit? Profit = total revenue – total cost Total cost – includes all opportunity costs Zero-profit equilibrium Economic profit is zero Accounting profit is positive * ? 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Supply Curve Market – in long run equilibrium P = minimum ATC Zero economic profit Sup