1、(微观经济学英文课件）Chap14 Firms in Competitive MarketsHarcourt,Inc.items and derived items copyright 2001 by Harcourt,Inc.uA market is a group of buyers and sellers of a particular good or service.u4 types of market?perfectly competitive market(Perfect Competition)Monopoly,Oligopoly,Monopolistic Competition
2、Marketsperfectly competitive marketucharacteristics:umany buyers and sellers.They have a negligible impact on the market price.uThe goods are largely the same.uFirms can freely enter or exit the market.ua competitive firm is a price takernUnit 1 Revenue of a Competitive FirmnUnit 2 The Firms Short-R
3、un DecisionnUnit 3 The Firms Long-Run DecisionnUnit 4 Supply in a Competitive MarketTR(Q)=PQTRAR=MR=PQUnit 1 Revenue of a Competitive FirmTR,AR,MR?Marginal revenue is the change in total revenue from an additional unit sold.goaluThe goal of a competitive firm is to maximize profit.utotal revenue-tot
4、al cost.derivative TRTCTRTCQABOQ0TFCMCMRsodQdTCdQdTRdQdQTCQTRQ：）（）（）（0When MR MC,will increase QWhen MR AC，0.When P=AC，=0.when AVC P AC，0.but continue(ignore sunk costs)When P=AVC Critical Point,Shut-down Point P AVC exituA shutdown refers to a short-run decision not to produce anything during a spe
5、cific period of time uExit refers to a long-run decision to leave the market.nThe firm considers its sunk costs when deciding to exit,but ignores them when deciding whether to shut down.uSunk costs are costs that have already been committed and cannot be recovered.uIn the zero-profit equilibrium,the
6、 firms revenue compensates the owners for the time and money they expend to keep the business going.short-run supply curvendeduce：nP1，use MR=MC,find Q1nP2，use MR=MC，find Q2nconnect（P1,Q1）(P2,Q2）nso：PminAVC This section MC curve is also the firms supply curveOQPP1P2Q1Q2SMC AR=MR=DAVCUnit 3 The Firms
7、Long-Run DecisionuIn the long-run,to Exit or Enter a Market because no FC,so only AC,the firm uif P ACu EnterQuantityMCAC0CostsFirm enters if P ACFirm exitsif P ACQuantityMCAC0CostsFirms long-run supply curveHarcourt,Inc.items and derived items copyright 2001 by Harcourt,Inc.MarketFirmQuantity(firm)
8、0PriceMCATCP1Quantity(market)Price0D1P1Q1AS1(a)Initial Condition(first market then firm)PWhy in a long-run P=MinACnSuppose Increase in Demand in the Short Run.Harcourt,Inc.items and derived items copyright 2001 by Harcourt,Inc.D2MarketFirmQuantity(firm)0PriceMC ATCP1Quantity(market)Price0D1P1Q1AS1(b
9、)When increse in demand to D2 then Short-Run get the profitQ2BP2P2ProfitHarcourt,Inc.items and derived items copyright 2001 by Harcourt,Inc.MarketFirmQuantity(firm)0PriceMC ATCP1Quantity(market)Price0D1P1Q1AS1(c)Profit induce entry to S2,so restoring Long-Rune quilibriumD2BQ2P2S2CQ3Harcourt,Inc.item
10、s and derived items copyright 2001 by Harcourt,Inc.SouIn a market with free entry and exit,profits are driven to zero in the long run.uSo P=Min ACnIn the zero-profit equilibrium,economic profit is 0,but accounting profit is positive.Unit 4 Supply in a Competitive MarketThe Short Run.(a)Individual Fi
11、rm SupplyQuantity(firm)0Price(b)Market SupplyQuantity(market)Price0SupplyMC1.00$2.001002001.00$2.00100,000200,000The Long Run:.(a)Firms Zero-Profit ConditionQuantity(firm)0Price P=minimum ATC(b)Market SupplyQuantity(market)Price0SupplyMCATCHarcourt,Inc.items and derived items copyright 2001 by Harcourt,Inc.Why the Long-Run Supply Curve Might Slope UpwarduSome resources used in production may be available only in limited quantities.(such as famers use land)uFirms may have different costs.(first lower costs person enter,and then the higher cost person enter)
