EC202: Worked Example #3.6 Frank Cowell April 2005

Slides:

Advertisements

Similar presentations

The firm in the short run 1. Alternative market structures 1. Alternative market structures 2. Assumptions of perfect competition 2. Assumptions of perfect.

Advertisements

Ec100 Week 7. Question 1 If a firm produces 9 units its total costs are £52. If it produces a 10th unit, its total cost rises to £60. What is the average.

Week 6 Managerial Economics. Order of Business Homework Assigned Lectures Other Material Lectures for Next Week.

Modeling Firms’ Behavior Most economists treat the firm as a single decision-making unit the decisions are made by a single dictatorial manager who rationally.

Graph copyright © 2003 by Pearson Education, Inc. Trend in the Overall Unemployment Rate Feb 2003: 5.8%

The Firm: Demand and Supply

1 Chap 3: Productivity, Output, and Employment Focus : The Labor Market What factors determine real wage and the employment level? How equilibrium is achieved.

11 CHAPTER Perfect Competition

Managerial Economics-Charles W. Upton Equilibrium with Different Cost Functions.

Lectures in Microeconomics-Charles W. Upton A Competitive Industry.

Firm Supply Demand Curve Facing Competitive Firm Supply Decision of a Competitive Firm Producer’s Surplus and Profits Long-Run.

Lectures in Microeconomics-Charles W. Upton Solution to Three Competition Problems.

 relatively small economies of scale  many firms  product differentiation  close but not perfect substitutes  product characteristics, location, services.

All Rights ReservedMicroeconomics © Oxford University Press Malaysia, – 1.

Summer Semester  Objective of a firm in a competitive market is to maximize profit.  Profit is equal to total revenue minus total cost of production.

PERFECTLY COMPETITIVE MARKETS. MAIN ASSUMPTION OF PERFECT COMPETITION   many small firms (too small to affect the market price)   identical product.

Long-Run Outcomes in Perfect Competition. 1.The Industry Supply Curve a.This is the relationship between the price and the total output of an industry.

Frank Cowell: EC202 Revision Lecture REVISION LECTURE EC th April 2012 Frank Cowell April

Price Takers and the Competitive Process

Economics 2010 Lecture 12 Perfect Competition. Competition  Perfect Competition  Firms Choices in Perfect Competition  The Firm’s Short-Run Decision.

Frank Cowell: Microeconomics Exercise 3.3 MICROECONOMICS Principles and Analysis Frank Cowell November 2006.

PERFECT COMPETITION 11 CHAPTER. Objectives After studying this chapter, you will able to  Define perfect competition  Explain how price and output are.

Law of Supply and the Supply Curve Chapter 7 Section 3.

EC th March 2011 Frank Cowell

Frank Cowell: Microeconomics The Firm: Demand and Supply MICROECONOMICS Principles and Analysis Frank Cowell Almost essential Firm: Optimisation Almost.

Frank Cowell: Microeconomics Exercise 3.4 MICROECONOMICS Principles and Analysis Frank Cowell November 2006.

8 | Perfect Competition Perfect Competition and Why It Matters How Perfectly Competitive Firms Make Output Decisions Entry and Exit Decisions in the Long.

ECON107 Principles of Microeconomics Week 13 DECEMBER w/12/2013 Dr. Mazharul Islam Chapter-12.

EC202: Worked Example #3.8 Frank Cowell April 2004 This presentation covers exactly the material set out in the file WorkedExamples.pdf, but with the addition.

Long Run A planning stage of Production Everything is variable and nothing fixed— therefore only 1 LRATC curve and no AVC.

EC202: Worked Example #3.4 Frank Cowell April 2003 This presentation covers exactly the material set out in the file WorkedExamples.pdf, but with the addition.

Perfect Competition.

Perfect Competition. Objectives After studying this chapter, you will able to  Define perfect competition  Explain how price and output are determined.

CONTEMPORARY ECONOMICS© Thomson South-Western 11.4Aggregate Demand and Aggregate Supply  Explain what is meant by aggregate output and the economy’s price.

A perfect competitor is a price taker, so it must accept the price dictated by the market Thus, the individual business’s demand curve is different than.

Monopoly Chapter 7 Copyright © 2011 by The McGraw-Hill Companies, Inc. All Rights Reserved.McGraw-Hill/Irwin.

EC202: Worked Example #3.18 Frank Cowell April 2004 This presentation covers exactly the material set out in the file WorkedExamples.pdf, but with the.

EC202: Worked Example #3.13 Frank Cowell April 2005 This presentation covers exactly the material set out in the file WorkedExamples.pdf, but with the.

Lecture 7 Chapter 20: Perfect Competition 1Naveen Abedin.

PERFECT COMPETITION 11 CHAPTER. Competition Perfect competition is an industry in which:  Many firms sell identical products to many buyers.  There.

McGraw-Hill/Irwin Chapter 7: Pure Competition Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

The Story of Pure Competition The Green Bean Market Perfection: Most Efficient (3 Ways) production economic allocation of scarce resources The most output,

THE MOUSE Left Click THE MOUSE Right Click.

ECONOMICS FOR BUSINESS (MICROECONOMICS) Lesson 2

COMPETITIVE SUPPLY IN THIS SECTION WE WILL DERIVE THE COMPETITIVE FIRM’S SUPPLY CURVE. THEN WE’LL ADD TOGETHER THE SUPPLY CURVES OF THE FIRMS TO GET THE.

Firm Behavior Under Perfect Competition

MICROECONOMICS Principles and Analysis Frank Cowell

8/9a - ARE BUSINESSES EFFICIENT? Pure Competition in the Short Run

Economic Analysis for Managers (ECO 501) Fall: 2012 Semester

Chapter 14 Perfectly competitive Market

MICROECONOMICS Principles and Analysis Frank Cowell

Monopolistic Competition

8 | Perfect Competition • Perfect Competition and Why It Matters

Long-Run Outcomes in Perfect Competition

EC202: Worked Example #3.19 Frank Cowell April 2004

EC212: Worked Example #3.21 Frank Cowell April 2004

EC202: Worked Example #3.3 Frank Cowell April 2004

Perfect Competition Long Run Overheads.

EC202: Worked Example #3.17 Frank Cowell April 2004

EC202: Worked Example #3.16 Frank Cowell April 2004

Chapter 8 Perfect Competition.

10 C H A P T E R Pure Competition.

MICROECONOMICS Principles and Analysis Frank Cowell

Microeconomics Modules 4-6

Market Equilibrium – Consumer and Producer Surplus Graphically, we can identify the areas representing consumer and producer surplus, which.

Perfectly Competitive Markets

EC202: Worked Example #3.10 Frank Cowell April 2006

Marginal, Average & Total Revenue

COSTS OF PRODUCTION General principle: If you know the technology of production (the production function or total product curve), and if you know the.

AS-AD curves: how natural is the natural rate of unemployment?

Presentation transcript:

EC202: Worked Example #3.6 Frank Cowell April 2005 This presentation covers exactly the material set out in the file WorkedExamples.pdf, but with the addition of a few graphics and comments To start the presentation select Slideshow\View Show or click on icon below left. Mouse click or [Enter] to advance through slide show

WX3.6: part 1

For Q below this get IRTS and vice versa WX3.6: part 1 Total cost: Marginal cost: Average cost: MC intersects AC at: For Q below this get IRTS and vice versa This is where:

WX3.6: part 2 Price at Q is: Price P separates regimes: Identical this portion of MC Price P separates regimes: Exactly two values here Cheaper to close down here

WX3.6: part 2  AC MC P Demand: high a Supply (one firm) Demand: low a Qi P 1 2 3 4 5 6 7 8 9 10 0.5 1.5 AC Demand: high a Supply (one firm)  MC Demand: low a

WX3.6: part 3 Two such firms: extra point half-way between green blobs Four such firms: points at quarter, half, three-quarter positions between blobs. Infinity of these firms: all points between blobs

WX3.6: part 4

WX3.6: part 4 High demand: unique equilibrium on upper part of supply curve Very low demand: equilibrium with zero output. In between: no equilibrium for a single firm?

WX3.6: part 4 If there is equilibrium Supply=Demand gives us Using definition of P: This is only valid if P > P: This yields the condition:

WX3.6: part 5 Equilibrium condition Supply=Demand now gives us Outcome depends on which of three regimes applies to demand, high, medium or low

WX3.6: part 5 High demand Medium demand. Average output per firm is Achieve this by putting a proportion q at Q and 1–q at 0 where Low demand. Output per firm is 0