第14章-竞争市场上的企业-曼昆经济学原理第七版.pptVIP

Supply Curve Long run Process of entry and exit ends when Firms still in market make zero economic profit (P = ATC) Because MC = ATC: Efficient scale Long run supply curve is perfectly elastic Horizontal at minimum ATC ? 2015 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 * ? 2015 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 ? 2015 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. * “We’re a nonprofit organization - we don’t intend to be, but we are!” Supply Curve Market in long run equilibrium P = minimum ATC Zero economic profit Increase in demand Demand curve shifts outward Short run Higher quantity Higher price: P ATC – positiv