EB_Parkin_EssEco6wm2
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EB_Parkin_EssEco6wm2
1Explain a perfectly competitive firm's profit-maximizing choices and derive its supply curve.2Explain how output, price, and profit are determined in EB_Parkin_EssEco6wm2n the short run.3Explain how output, price, and profit are determined in the long run and explain why perfect competition is efficient.277Find more at www.downloadslide.com 27« Pan 3 • PRICES. PROFITS, AND INDUSTRY PERFORMANCEMARKET TYPESThe four market types are•Perfect competition•Monopoly•Monopol EB_Parkin_EssEco6wm2istic competition•OligopolyPerfect competitionA market in which there are many firms, each selling an identical produce many buyers: no barriers to thEB_Parkin_EssEco6wm2
e entry of new firms into the industry; no advantage to established firms: and buyers and sellers are well informed about prices.■ Perfect Competition1Explain a perfectly competitive firm's profit-maximizing choices and derive its supply curve.2Explain how output, price, and profit are determined in EB_Parkin_EssEco6wm2tablished firms have no advantage over new firms.•Sellers and buyers are well informed about prices.These conditions that define perfect competition arise when the market demand for the product is large relative to the output of a single producer. This situation arises when economies of scale are ab EB_Parkin_EssEco6wm2sent so the efficient scale of each firm is small. But a large market and the absence of economies of scale are not sufficient to create perfect compeEB_Parkin_EssEco6wm2
tition. In addition, each firm must produce a good or service that has no characteristics that are unique to that firm so that consumers don't care fr1Explain a perfectly competitive firm's profit-maximizing choices and derive its supply curve.2Explain how output, price, and profit are determined in EB_Parkin_EssEco6wm2cture of paper cups and plastic shopping bags, lawn service, dry cleaning, and the provision of laundry services are all examples of highly competitive industries.MonopolyA market in which one firm sells a good or service that has no close substitutes and a barrier blocks the entry of new firms.Mono EB_Parkin_EssEco6wm2polistic competitionA market in which a large number of firms compete by making similar but slightly different products.OligopolyA market in which a sEB_Parkin_EssEco6wm2
mall number of interdependent firms compete.■ Other Market TypesMonopoly arises when one firm sells a good or service that has no close substitutes an1Explain a perfectly competitive firm's profit-maximizing choices and derive its supply curve.2Explain how output, price, and profit are determined in EB_Parkin_EssEco6wm2estricted to a given location. For many years, a global firm called DeBeers had a near international monopoly in diamonds. Microsoft has a near monopoly in producing the operating system for a personal computer.Monopolistic competition arises when a large number of firms compete by making similar bu EB_Parkin_EssEco6wm2t slightly different products. Each firm is the sole producer of the particular version of the good in question. For example, in the market for runninEB_Parkin_EssEco6wm2
g shoes, Nike, Reebok, Fila, Asics, New Balance, and many others make their own versions of the perfect shoe. The term "monopolistic competition" remi1Explain a perfectly competitive firm's profit-maximizing choices and derive its supply curve.2Explain how output, price, and profit are determined in EB_Parkin_EssEco6wm2dependent firms compete. Airplane manufacture is an example of oligopoly. Oligopolies might produce almost identical products, such as Duracell and Energizer batteries; or they might produce differentiated products, such as the colas produced by Coke and Pepsi.We study perfect competition in this ch EB_Parkin_EssEco6wm2apter, monopoly in Chapter 12, and monopolistic competition and oligopoly in Chapter 13.Find more at www.downloadslide.com chapter 11 • Perfect CompetEB_Parkin_EssEco6wm2
ition 27911.1 A FIRM'S PROFIT-MAXIMIZING CHOICESA firm's objective is to maximize economic profit, which is equal to total revenue minus the total cos1Explain a perfectly competitive firm's profit-maximizing choices and derive its supply curve.2Explain how output, price, and profit are determined in EB_Parkin_EssEco6wm2ieves its objective by deciding the quantity to produce. This quantity influences the firm's total revenue, total cost, and economic profit. In the long run, a firm achieves its objective by deciding whether to enter or exit a market.These are the key decisions that a firm in perfect competition mak EB_Parkin_EssEco6wm2es. Such a firm does not choose the price at which to sell its output. The firm in perfect competition is a price taker—it cannot influence the priceEB_Parkin_EssEco6wm2
of its product.1Explain a perfectly competitive firm's profit-maximizing choices and derive its supply curve.2Explain how output, price, and profit are determined in1Explain a perfectly competitive firm's profit-maximizing choices and derive its supply curve.2Explain how output, price, and profit are determined inGọi ngay
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