英文9--完全竞争.ppt

Summary In a market with free entry and exit, profits are driven to zero in the long run and all firms produce at the efficient scale. Changes in demand have different effects over different time horizons. Class assignments Cha 6: 5 ,7,8,9,10 Homework after class: Cha 6:2,3,4 * 43 P = AR = MR Profit Maximization for the Competitive Firm... Costs and Revenue AC MR Q* Q MC Profit Maximization for the Competitive Firm Profit maximization occurs at the quantity where marginal revenue equals marginal cost. When MR = MC ， Profit is maximized. P=MR, P=MC The Firm’s Short-Run Decision to Shut Down A shutdown refers to a short-run decision not to produce anything during a specific period of time because of current market conditions. Exit refers to a long-run decision to leave the market. The Firm’s Short-Run Decision to Shut Down The firm considers its sunk costs when deciding to exit, but ignores them when deciding whether to shut down. Sunk costs are costs that have already been committed and cannot be recovered. The Firm’s Short-Run Decision to Shut Down The firm shuts down if the revenue it gets from producing is less than the variable cost of production. Shut down if TR VC Shut down if TR/Q VC/Q Shut down if P AVC * a. P1AC (ATC) P1 P2 P3 AC AVC MC If P ATC, keep producing at a profit. The Firm’s Short-Run Decision to Shut Down... Quantity ATC AVC 0 Costs MC If P AVC, keep producing in the short run. If P ATC, keep producing at a profit. Firm’s short-run supply curve. b. P2AC, AVC AC AVC P1 P2 P3 If P AVC, keep producing in the short run. * c. If P3AVC0,shut down. AC AVC P1 P2 P3 The Firm’s Short-Run Decision to Shut Down The portion of the marginal-cost curve that lies above average variable cost is the competitive firm’s short-run supply curve. The Marginal-Cost Curve and the Firm’s Supply Decision... Costs and Revenue This section of the firm’s MC curve is also the firm’s supply curve. MC AC P=MR=AR O Q The Firm’s Long-Run Decision