The document summarizes key concepts about the competitive firm and profit maximization. It discusses how firms in perfect competition are price takers and seek to maximize profits by producing where marginal revenue equals marginal cost. Firms will shut down if price falls below average variable cost. The investment decision depends on whether anticipated profits can cover costs. Determinants of supply include input prices, technology, expectations, and taxes, which can cause the supply curve to shift.
The document summarizes the key characteristics and dynamics of competitive markets. In perfect competition, many small firms produce identical goods, it is easy to enter and exit the industry, and firms price their goods where marginal cost equals price. If an industry is profitable, new firms will enter and supply will increase, driving the price down until profits reach zero at the long-run equilibrium. This process forces firms to continually improve efficiency and quality to remain competitive.
This document provides an overview of perfect competition in 3 chapters and sections:
1) The characteristics of perfect competition and why it matters for firms and markets.
2) How perfectly competitive firms determine optimal output levels by producing where marginal revenue equals marginal cost.
3) How firms enter and exit markets in response to economic profits and losses in the long-run to achieve equilibrium with zero profits.
Perfect competition requires: firms are price takers, many sellers/buyers, free entry/exit, identical products, complete information. In short-run, individual firms maximize profits where marginal cost (MC) equals marginal revenue (MR). Market supply is the sum of individual firm MC curves. In long-run, zero economic profits are achieved as new entry drives prices down until MC equals average costs.
The document discusses the concept of perfect competition in economics. It provides the key characteristics that define a perfectly competitive market including that there are many small firms, no barriers to entry or exit, identical products, and complete information. Firms are price takers and seek to maximize profits by producing where marginal cost equals marginal revenue. In the long run, perfect competition leads to zero economic profits as new firms enter if profits are positive and firms exit if losses occur.
A market can be defined as a group of firms willing and able to sell a similar product or service to the same potential buyers.
Imperfect competition covers all situations where there is neither pure competition nor pure monopoly.
Perfect competition and pure monopoly are very unlikely to be found in the real world.
In the real world, it is the imperfect competition lying between perfect competition and pure monopoly.
The fundamental distinguishing characteristic of imperfect competition is that average revenue curve slopes downwards throughout its length, but it slopes downwards at different rates in different categories of imperfect competition.
Monopoly refers to the market situation where there is a
Single seller selling a product which has no close substitutes.
Monopolies are characterized by a lack of economic competition to produce the good or service, a lack of viable substitute goods, and the existence of a high monopoly price well above the firm's marginal cost that leads to a high monopoly profit
The word “oligopoly” comes from the Greek “oligos” meaning "little or small” and “polein” meaning “to sell.” When “oligos” is used in the plural, it means “few” ,few firms or few sellers.
DEFINATION:
Oligopoly is that form of market where there are few firms and there is natural interdependence among the firms regarding price and output policy.
Principles of Microeconomics Chapter Sevenkmurphy7642
This document provides an overview of key concepts related to perfect competition. It discusses the criteria for perfect competition, including many firms producing identical goods, free entry and exit into the market, and all parties having full information. Firms under perfect competition are price takers and maximize profits by producing where marginal revenue equals marginal cost. In the long run, perfectly competitive markets achieve both productive and allocative efficiency.
The document summarizes the key characteristics and dynamics of competitive markets. In perfect competition, many small firms produce identical goods, it is easy to enter and exit the industry, and firms price their goods where marginal cost equals price. If an industry is profitable, new firms will enter and supply will increase, driving the price down until profits reach zero at the long-run equilibrium. This process forces firms to continually improve efficiency and quality to remain competitive.
This document provides an overview of perfect competition in 3 chapters and sections:
1) The characteristics of perfect competition and why it matters for firms and markets.
2) How perfectly competitive firms determine optimal output levels by producing where marginal revenue equals marginal cost.
3) How firms enter and exit markets in response to economic profits and losses in the long-run to achieve equilibrium with zero profits.
Perfect competition requires: firms are price takers, many sellers/buyers, free entry/exit, identical products, complete information. In short-run, individual firms maximize profits where marginal cost (MC) equals marginal revenue (MR). Market supply is the sum of individual firm MC curves. In long-run, zero economic profits are achieved as new entry drives prices down until MC equals average costs.
The document discusses the concept of perfect competition in economics. It provides the key characteristics that define a perfectly competitive market including that there are many small firms, no barriers to entry or exit, identical products, and complete information. Firms are price takers and seek to maximize profits by producing where marginal cost equals marginal revenue. In the long run, perfect competition leads to zero economic profits as new firms enter if profits are positive and firms exit if losses occur.
A market can be defined as a group of firms willing and able to sell a similar product or service to the same potential buyers.
Imperfect competition covers all situations where there is neither pure competition nor pure monopoly.
Perfect competition and pure monopoly are very unlikely to be found in the real world.
In the real world, it is the imperfect competition lying between perfect competition and pure monopoly.
The fundamental distinguishing characteristic of imperfect competition is that average revenue curve slopes downwards throughout its length, but it slopes downwards at different rates in different categories of imperfect competition.
Monopoly refers to the market situation where there is a
Single seller selling a product which has no close substitutes.
Monopolies are characterized by a lack of economic competition to produce the good or service, a lack of viable substitute goods, and the existence of a high monopoly price well above the firm's marginal cost that leads to a high monopoly profit
The word “oligopoly” comes from the Greek “oligos” meaning "little or small” and “polein” meaning “to sell.” When “oligos” is used in the plural, it means “few” ,few firms or few sellers.
DEFINATION:
Oligopoly is that form of market where there are few firms and there is natural interdependence among the firms regarding price and output policy.
Principles of Microeconomics Chapter Sevenkmurphy7642
This document provides an overview of key concepts related to perfect competition. It discusses the criteria for perfect competition, including many firms producing identical goods, free entry and exit into the market, and all parties having full information. Firms under perfect competition are price takers and maximize profits by producing where marginal revenue equals marginal cost. In the long run, perfectly competitive markets achieve both productive and allocative efficiency.
This document provides an overview of monopoly, including:
- A monopoly is a single producer in an industry with no competition. This gives the monopolist power to dictate price.
- A monopolist maximizes profits by producing at the quantity where marginal revenue equals marginal cost and charging the price corresponding to that quantity on the demand curve.
- While monopolies may have some benefits like economies of scale, they also result in lower output, higher prices, and less incentive for innovation compared to competitive markets.
This document discusses market equilibrium and the invisible hand theory. It defines key economic concepts like accounting profit, economic profit, normal profit and explains how markets respond to profits and losses. The invisible hand theory states that when individuals act in their self-interest, the aggregate outcome is collective well-being. Markets tend toward equilibrium where there are no economic profits or losses. At equilibrium, resources are allocated efficiently but no opportunities remain for individuals to profit. The document provides examples to illustrate these concepts.
The document discusses profit maximization and competitive supply in perfectly competitive markets. It can be summarized as follows:
1. Perfectly competitive markets are characterized by price-taking firms, homogeneous products, and free entry and exit. Firms seek to maximize profits by producing where marginal revenue equals marginal cost.
2. The competitive firm's short-run supply curve slopes upward as higher prices induce firms to increase production. In the long-run, firms adjust all inputs including plant size to minimize average costs and maximize profits.
3. Market supply is the sum of individual firm supplies. It has a kinked shape and is upward sloping in the short-run. In the long-run, firms enter
A firm’s pricing market power depends on its competitive environment.
In perfectly competitive markets, firms have no market power. They are “price takers.” They make decisions based on the market price, which they are powerless to influence.
In markets that are not perfectly competitive (which describes most markets), most firms have some degree of market power.
Strategy in the absence of market power
Firms cannot influence price and, because products are not unique, they cannot influence demand by advertising or product differentiation.
Managers in this environment maximize profit by minimizing cost, through the efficient use of resources, and by determining the quantity to produce.
https://azpapers.com/imperfect-competition-market-analysis/
This document provides an overview of imperfect competition, including monopoly, oligopoly, and monopolistic competition. It discusses the key differences between imperfect and perfect competition. Specifically, it covers:
1) The three types of imperfect competition and how they differ from perfect competition in terms of number of firms, price flexibility, entry/exit, and potential for economic profits.
2) The five sources of monopoly power, with a focus on economies of scale as the most enduring source due to decreasing average costs.
3) How monopolists determine profit-maximizing output by setting marginal revenue equal to marginal cost, which results in a smaller output and higher price than the socially optimal level.
4) Examples are provided
The document discusses theories of international trade when economies of scale and imperfect competition are present. It covers key topics such as:
1) Economies of scale can occur at the firm level (internal) or industry level (external) and influence market structure. Industries with internal economies often have an oligopolistic structure while external economies tend to be perfectly competitive.
2) Under monopolistic competition, firms produce differentiated goods and view competitors' prices as fixed. The equilibrium number of firms and prices are determined by the intersection of average cost and profit curves.
3) Intra-industry trade allows countries to benefit from larger markets and greater product variety. It is an important component of trade between industrialized nations.
This document discusses pricing and output decisions under pure competition. It defines key terms like market, market structure, and types of market structures. Pure competition is characterized by many small firms, identical goods, free entry and exit. In the short run, firms will produce where marginal revenue equals marginal cost to maximize profits. In the long run, firms will enter or exit the industry until price equals minimum average total cost and economic profits are zero. Overall, pure competition is said to lead to efficient allocation of resources, though it has shortcomings around income distribution and market failures.
This document provides an overview of different market structures:
- Perfect competition is characterized by many small firms, homogeneous products, perfect information and free entry/exit. Firms are price-takers and earn zero profits in the long run.
- Monopolies have a single firm, barriers to entry, downward sloping demand and set price above marginal cost to earn profits.
- Monopolistic competition has many small firms, differentiated products, free entry/exit. In the short run firms earn profits but in the long run entry drives profits to zero as under perfect competition.
The document discusses market structures and perfect competition. It describes the key features of perfect competition as having many small businesses, standardized products, free entry and exit, and firms that are price takers. Under perfect competition, firms maximize profits by producing at the quantity where marginal revenue equals marginal cost. In the long run, perfectly competitive markets achieve equilibrium when price equals minimum average cost and all firms earn zero economic profits. The benefits of perfect competition are that it results in minimum-cost pricing and marginal-cost pricing, which benefits consumers.
1. A perfectly competitive market has six key characteristics: many small firms, identical products, free entry and exit, perfect information, price-taking behavior on the part of buyers and sellers.
2. For a firm in perfect competition, marginal revenue equals price and the profit-maximizing level of output occurs where marginal revenue equals marginal cost.
3. In the long run, firms will enter or exit the market until economic profits are driven down to zero and the industry reaches long-run competitive equilibrium.
CVP Analysis 17th Edition By Azad and Mansoor.pptxazadalisthp2020i
The 17th edition of CVP Analysis provides a concise overview of how costs, volume, and prices influence profitability, offering practical insights and real-world applications for students and professionals in managerial accounting. With updated content and examples, it serves as an essential resource for mastering cost-volume-profit analysis.
Be chap5 competitive, monopoly, monopolistic competitive marketsfadzliskc
This document provides an overview of different market structures including perfect competition, monopoly, and monopolistic competition. It defines key characteristics of each market structure and explains how firms determine price and output to maximize profits or minimize losses in the short run and long run. The document also discusses sources of monopoly power and how monopolies, unlike competitive firms, do not have a supply curve. It analyzes the social costs of monopoly power through deadweight loss.
This document provides an overview of perfect competition in the context of the milk market. It defines key characteristics of perfect competition, including a large number of small producers/sellers, standardized/homogeneous products, price-taking behavior, free entry and exit, and lack of non-price competition. The document then analyzes how the milk market exhibits these characteristics, such as small individual farms, uniform milk quality, and farmers being price takers. It concludes that the milk market approximates perfect competition.
The document discusses market structures, specifically perfect competition. It defines key characteristics of perfect competition including a large number of small firms, homogeneous products, free entry and exit, and firms being price takers. Under perfect competition, each firm's demand curve is perfectly elastic and marginal revenue equals price. Firms produce where price equals marginal cost to maximize profits. In the long run, normal profits are achieved as entry and exit cause supply to equal demand. Perfect competition leads to allocative and productive efficiency.
In a perfectly competitive market:
- Many buyers and sellers exist
- Firms are price takers and the actions of any single firm do not impact the market price
- In the long run, firms will enter or exit the market until price equals minimum average total cost and economic profit is zero.
The document discusses different market structures and pricing strategies. It begins by defining perfect competition and its key assumptions, including a large number of buyers and sellers, homogeneous products, free entry and exit of firms, and perfect information. It then discusses the equilibrium of the firm and industry in perfect competition in the short run and long run. Specifically, in the short run the best output level is where marginal revenue equals marginal cost, and in the long run it is where price equals long run marginal cost. The document then discusses monopolistic competition and oligopoly before analyzing monopoly in more detail.
The document discusses market structure and identifies its key characteristics, including the number of firms in an industry, nature of products, barriers to entry, and degree of monopoly power. It outlines a spectrum from perfect competition to monopoly and describes several market structures along this spectrum, including their distinguishing features. In particular, it provides detailed diagrams and explanations of perfect competition, monopolistic competition, and oligopoly market structures.
The document discusses key concepts relating to perfect competition, including:
- Firms are price-takers and face perfectly elastic demand in competitive markets
- Profit maximization occurs where marginal revenue equals marginal cost
- In the short-run, a firm may earn profits, losses, or just cover costs
- In the long-run, if profits exist, entry by new firms will increase supply and drive prices down until profits are eliminated
Monopolistic competition is characterized by many small firms that produce differentiated products. In the short run, firms can earn economic profits by producing at a quantity where marginal revenue equals marginal cost. However, in the long run, free entry and exit causes the demand curve to shift left as more firms enter, eliminating economic profits and resulting in normal profits for firms. Firms produce at the minimum point of their average total cost curve where price equals average cost.
Basics of business monopoly and competitive marketsShweta Iyer
The document discusses different market structures including perfect competition, monopoly, monopolistic competition, oligopoly, and duopoly. It provides characteristics and diagrams to analyze each structure. A monopolistic market is described as having many firms differentiating similar products, with relatively easy entry and exit into the industry and imperfect consumer and producer knowledge. Firms in monopolistic competition can earn abnormal profits in the short run but normal profits in the long run as entry of new firms causes prices to fall.
This document discusses the costs of production. It defines key concepts like the production function, marginal physical product, diminishing returns, and different types of costs including fixed costs, variable costs, average costs, marginal costs, and economic vs accounting costs. It explains how average costs have a U-shaped curve and discusses economies and diseconomies of scale related to long-run costs.
The document summarizes key concepts about the competitive firm and profit maximization. It discusses how firms in perfect competition are price takers and seek to maximize profits by producing where marginal revenue equals marginal cost. Firms will shut down if price falls below average variable cost. The determinants of a firm's supply include input prices, technology, expectations, and taxes/subsidies. A change in these determinants shifts the supply curve by affecting marginal costs.
This document provides an overview of monopoly, including:
- A monopoly is a single producer in an industry with no competition. This gives the monopolist power to dictate price.
- A monopolist maximizes profits by producing at the quantity where marginal revenue equals marginal cost and charging the price corresponding to that quantity on the demand curve.
- While monopolies may have some benefits like economies of scale, they also result in lower output, higher prices, and less incentive for innovation compared to competitive markets.
This document discusses market equilibrium and the invisible hand theory. It defines key economic concepts like accounting profit, economic profit, normal profit and explains how markets respond to profits and losses. The invisible hand theory states that when individuals act in their self-interest, the aggregate outcome is collective well-being. Markets tend toward equilibrium where there are no economic profits or losses. At equilibrium, resources are allocated efficiently but no opportunities remain for individuals to profit. The document provides examples to illustrate these concepts.
The document discusses profit maximization and competitive supply in perfectly competitive markets. It can be summarized as follows:
1. Perfectly competitive markets are characterized by price-taking firms, homogeneous products, and free entry and exit. Firms seek to maximize profits by producing where marginal revenue equals marginal cost.
2. The competitive firm's short-run supply curve slopes upward as higher prices induce firms to increase production. In the long-run, firms adjust all inputs including plant size to minimize average costs and maximize profits.
3. Market supply is the sum of individual firm supplies. It has a kinked shape and is upward sloping in the short-run. In the long-run, firms enter
A firm’s pricing market power depends on its competitive environment.
In perfectly competitive markets, firms have no market power. They are “price takers.” They make decisions based on the market price, which they are powerless to influence.
In markets that are not perfectly competitive (which describes most markets), most firms have some degree of market power.
Strategy in the absence of market power
Firms cannot influence price and, because products are not unique, they cannot influence demand by advertising or product differentiation.
Managers in this environment maximize profit by minimizing cost, through the efficient use of resources, and by determining the quantity to produce.
https://azpapers.com/imperfect-competition-market-analysis/
This document provides an overview of imperfect competition, including monopoly, oligopoly, and monopolistic competition. It discusses the key differences between imperfect and perfect competition. Specifically, it covers:
1) The three types of imperfect competition and how they differ from perfect competition in terms of number of firms, price flexibility, entry/exit, and potential for economic profits.
2) The five sources of monopoly power, with a focus on economies of scale as the most enduring source due to decreasing average costs.
3) How monopolists determine profit-maximizing output by setting marginal revenue equal to marginal cost, which results in a smaller output and higher price than the socially optimal level.
4) Examples are provided
The document discusses theories of international trade when economies of scale and imperfect competition are present. It covers key topics such as:
1) Economies of scale can occur at the firm level (internal) or industry level (external) and influence market structure. Industries with internal economies often have an oligopolistic structure while external economies tend to be perfectly competitive.
2) Under monopolistic competition, firms produce differentiated goods and view competitors' prices as fixed. The equilibrium number of firms and prices are determined by the intersection of average cost and profit curves.
3) Intra-industry trade allows countries to benefit from larger markets and greater product variety. It is an important component of trade between industrialized nations.
This document discusses pricing and output decisions under pure competition. It defines key terms like market, market structure, and types of market structures. Pure competition is characterized by many small firms, identical goods, free entry and exit. In the short run, firms will produce where marginal revenue equals marginal cost to maximize profits. In the long run, firms will enter or exit the industry until price equals minimum average total cost and economic profits are zero. Overall, pure competition is said to lead to efficient allocation of resources, though it has shortcomings around income distribution and market failures.
This document provides an overview of different market structures:
- Perfect competition is characterized by many small firms, homogeneous products, perfect information and free entry/exit. Firms are price-takers and earn zero profits in the long run.
- Monopolies have a single firm, barriers to entry, downward sloping demand and set price above marginal cost to earn profits.
- Monopolistic competition has many small firms, differentiated products, free entry/exit. In the short run firms earn profits but in the long run entry drives profits to zero as under perfect competition.
The document discusses market structures and perfect competition. It describes the key features of perfect competition as having many small businesses, standardized products, free entry and exit, and firms that are price takers. Under perfect competition, firms maximize profits by producing at the quantity where marginal revenue equals marginal cost. In the long run, perfectly competitive markets achieve equilibrium when price equals minimum average cost and all firms earn zero economic profits. The benefits of perfect competition are that it results in minimum-cost pricing and marginal-cost pricing, which benefits consumers.
1. A perfectly competitive market has six key characteristics: many small firms, identical products, free entry and exit, perfect information, price-taking behavior on the part of buyers and sellers.
2. For a firm in perfect competition, marginal revenue equals price and the profit-maximizing level of output occurs where marginal revenue equals marginal cost.
3. In the long run, firms will enter or exit the market until economic profits are driven down to zero and the industry reaches long-run competitive equilibrium.
CVP Analysis 17th Edition By Azad and Mansoor.pptxazadalisthp2020i
The 17th edition of CVP Analysis provides a concise overview of how costs, volume, and prices influence profitability, offering practical insights and real-world applications for students and professionals in managerial accounting. With updated content and examples, it serves as an essential resource for mastering cost-volume-profit analysis.
Be chap5 competitive, monopoly, monopolistic competitive marketsfadzliskc
This document provides an overview of different market structures including perfect competition, monopoly, and monopolistic competition. It defines key characteristics of each market structure and explains how firms determine price and output to maximize profits or minimize losses in the short run and long run. The document also discusses sources of monopoly power and how monopolies, unlike competitive firms, do not have a supply curve. It analyzes the social costs of monopoly power through deadweight loss.
This document provides an overview of perfect competition in the context of the milk market. It defines key characteristics of perfect competition, including a large number of small producers/sellers, standardized/homogeneous products, price-taking behavior, free entry and exit, and lack of non-price competition. The document then analyzes how the milk market exhibits these characteristics, such as small individual farms, uniform milk quality, and farmers being price takers. It concludes that the milk market approximates perfect competition.
The document discusses market structures, specifically perfect competition. It defines key characteristics of perfect competition including a large number of small firms, homogeneous products, free entry and exit, and firms being price takers. Under perfect competition, each firm's demand curve is perfectly elastic and marginal revenue equals price. Firms produce where price equals marginal cost to maximize profits. In the long run, normal profits are achieved as entry and exit cause supply to equal demand. Perfect competition leads to allocative and productive efficiency.
In a perfectly competitive market:
- Many buyers and sellers exist
- Firms are price takers and the actions of any single firm do not impact the market price
- In the long run, firms will enter or exit the market until price equals minimum average total cost and economic profit is zero.
The document discusses different market structures and pricing strategies. It begins by defining perfect competition and its key assumptions, including a large number of buyers and sellers, homogeneous products, free entry and exit of firms, and perfect information. It then discusses the equilibrium of the firm and industry in perfect competition in the short run and long run. Specifically, in the short run the best output level is where marginal revenue equals marginal cost, and in the long run it is where price equals long run marginal cost. The document then discusses monopolistic competition and oligopoly before analyzing monopoly in more detail.
The document discusses market structure and identifies its key characteristics, including the number of firms in an industry, nature of products, barriers to entry, and degree of monopoly power. It outlines a spectrum from perfect competition to monopoly and describes several market structures along this spectrum, including their distinguishing features. In particular, it provides detailed diagrams and explanations of perfect competition, monopolistic competition, and oligopoly market structures.
The document discusses key concepts relating to perfect competition, including:
- Firms are price-takers and face perfectly elastic demand in competitive markets
- Profit maximization occurs where marginal revenue equals marginal cost
- In the short-run, a firm may earn profits, losses, or just cover costs
- In the long-run, if profits exist, entry by new firms will increase supply and drive prices down until profits are eliminated
Monopolistic competition is characterized by many small firms that produce differentiated products. In the short run, firms can earn economic profits by producing at a quantity where marginal revenue equals marginal cost. However, in the long run, free entry and exit causes the demand curve to shift left as more firms enter, eliminating economic profits and resulting in normal profits for firms. Firms produce at the minimum point of their average total cost curve where price equals average cost.
Basics of business monopoly and competitive marketsShweta Iyer
The document discusses different market structures including perfect competition, monopoly, monopolistic competition, oligopoly, and duopoly. It provides characteristics and diagrams to analyze each structure. A monopolistic market is described as having many firms differentiating similar products, with relatively easy entry and exit into the industry and imperfect consumer and producer knowledge. Firms in monopolistic competition can earn abnormal profits in the short run but normal profits in the long run as entry of new firms causes prices to fall.
This document discusses the costs of production. It defines key concepts like the production function, marginal physical product, diminishing returns, and different types of costs including fixed costs, variable costs, average costs, marginal costs, and economic vs accounting costs. It explains how average costs have a U-shaped curve and discusses economies and diseconomies of scale related to long-run costs.
The document summarizes key concepts about the competitive firm and profit maximization. It discusses how firms in perfect competition are price takers and seek to maximize profits by producing where marginal revenue equals marginal cost. Firms will shut down if price falls below average variable cost. The determinants of a firm's supply include input prices, technology, expectations, and taxes/subsidies. A change in these determinants shifts the supply curve by affecting marginal costs.
This document provides an overview of transfer payment programs like welfare and Social Security. It discusses how these programs work, their unintended consequences, and the tradeoffs involved. The major points covered are: transfer payments are provided by the government without an exchange of goods/services; the main recipients are the elderly and poor; these programs can discourage work; and there are dilemmas around balancing welfare eligibility, costs, and work incentives.
This document provides an overview of transfer payment programs like welfare and Social Security. It discusses how these programs work, their unintended consequences, and some of the tradeoffs involved. The major points covered are:
1) Transfer payments are distributed by the government to eligible recipients without requiring an exchange of goods or services. The main recipients are the elderly (via Social Security) and low-income families (via welfare).
2) These programs can discourage work by reducing the incentive to be employed. They may also influence behaviors like family size and retirement decisions.
3) Welfare programs face a dilemma between encouraging work and minimizing costs - strict rules may boost work but limit eligibility, while loose rules do the opposite.
4
This chapter introduces the core concepts and goals of economics. It discusses how scarcity requires economic choices about what to produce, how to produce it, and who receives goods and services. The production possibilities curve (PPC) illustrates the tradeoffs between choices. Markets and governments provide different approaches to these economic questions. The chapter establishes understanding economic decisions and tradeoffs as the foundation for further microeconomic and macroeconomic analysis.
This chapter introduces the concepts of supply and demand. It explains that the price of a good is determined by the interaction of supply and demand in a market. The law of demand states that as price increases, quantity demanded decreases, and vice versa. The law of supply states that as price increases, quantity supplied also increases, and vice versa. Equilibrium occurs when quantity supplied equals quantity demanded at the market price. If supply or demand shifts, a new equilibrium will be established at a different price. The chapter also discusses how price controls can prevent the market from reaching equilibrium.
This document provides an overview of market failures and the role of government in addressing them. It discusses how public goods, externalities, market power, and inequity can lead to market failures. The government aims to intervene to correct market failures and achieve a socially optimal output. However, government intervention also risks government failure if it fails to improve or worsens economic outcomes. A combination of market and government systems may be needed to determine the optimal mix of goods for society.
This document provides an overview of oligopoly market structure. Key points include:
- Oligopoly is characterized by a few dominating firms that each have some market power.
- Firms make decisions based on what they think competitors will do, resulting in interdependent behavior.
- Oligopolists avoid price competition and instead pursue nonprice competition like advertising and product differentiation.
- Coordination between oligopolists can involve explicit or tacit price fixing or market share allocation to behave like a monopoly.
- Barriers to entry like patents, brand loyalty, and regulations protect oligopolists from new competition.
This document provides an overview of monopolistic competition, including:
1) Monopolistic competition is a market structure where many firms produce similar but differentiated products, each having some control over price.
2) Firms engage in product differentiation and build brand loyalty to gain market power and act as a local monopoly to loyal customers.
3) While firms maximize profits by producing where MR=MC, in the long run excess capacity and entry by competitors will drive economic profits to zero, resulting in an inefficient market structure compared to perfect competition.
The Universal Account Number (UAN) by EPFO centralizes multiple PF accounts, simplifying management for Indian employees. It streamlines PF transfers, withdrawals, and KYC updates, providing transparency and reducing employer dependency. Despite challenges like digital literacy and internet access, UAN is vital for financial empowerment and efficient provident fund management in today's digital age.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
[4:55 p.m.] Bryan Oates
OJPs are becoming a critical resource for policy-makers and researchers who study the labour market. LMIC continues to work with Vicinity Jobs’ data on OJPs, which can be explored in our Canadian Job Trends Dashboard. Valuable insights have been gained through our analysis of OJP data, including LMIC research lead
Suzanne Spiteri’s recent report on improving the quality and accessibility of job postings to reduce employment barriers for neurodivergent people.
Decoding job postings: Improving accessibility for neurodivergent job seekers
Improving the quality and accessibility of job postings is one way to reduce employment barriers for neurodivergent people.
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...AntoniaOwensDetwiler
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
University of North Carolina at Charlotte degree offer diploma Transcripttscdzuip
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Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby...Donc Test
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting, 8th Canadian Edition by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Ebook Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Pdf Solution Manual For Financial Accounting 8th Canadian Edition Pdf Download Stuvia Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Financial Accounting 8th Canadian Edition Ebook Download Stuvia Financial Accounting 8th Canadian Edition Pdf Financial Accounting 8th Canadian Edition Pdf Download Stuvia
In a tight labour market, job-seekers gain bargaining power and leverage it into greater job quality—at least, that’s the conventional wisdom.
Michael, LMIC Economist, presented findings that reveal a weakened relationship between labour market tightness and job quality indicators following the pandemic. Labour market tightness coincided with growth in real wages for only a portion of workers: those in low-wage jobs requiring little education. Several factors—including labour market composition, worker and employer behaviour, and labour market practices—have contributed to the absence of worker benefits. These will be investigated further in future work.
2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
5 Tips for Creating Standard Financial ReportsEasyReports
Well-crafted financial reports serve as vital tools for decision-making and transparency within an organization. By following the undermentioned tips, you can create standardized financial reports that effectively communicate your company's financial health and performance to stakeholders.
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1. Elemental Economics - Introduction to mining.pdfNeal Brewster
After this first you should: Understand the nature of mining; have an awareness of the industry’s boundaries, corporate structure and size; appreciation the complex motivations and objectives of the industries’ various participants; know how mineral reserves are defined and estimated, and how they evolve over time.
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2. 8-2
Competition and Profits
• All firms are in business to make a profit.
• Their profit opportunities are limited by the
amount of competition they face.
– Little competition, easier to be profitable.
– Lots of competition, much more difficult.
3. 8-3
Learning Objectives
• 08-01. Know how profits are computed.
• 08-02. Know the characteristics of perfectly
competitive firms.
• 08-03. Know how a competitive firm
maximizes profit.
• 08-04. Know when a firm will shut down.
• 08-05. Know the difference between
production and investment decisions.
• 08-06. Know what shapes or shifts a firm’s
supply curve.
4. 8-4
The Profit Motive
• The expectation of profit is the basic incentive
to produce.
– Profit: the difference between total revenue and
total cost.
• The profit motive encourages firms to produce
the goods and services that consumers desire,
at prices they are willing to pay.
– What will happen to a firm if it produces goods that
no consumers want or are willing to pay for?
5. 8-5
Is the Profit Motive Bad?
• Some think so. Some believe
– It results in inferior products at higher prices.
– It leads to pollution, restricted competition, and an
unsafe workplace.
• Reality:
– It encourages firms to produce products customers
desire at prices they are willing to pay.
– It causes markets to adapt to changing economic
conditions and customer preferences.
6. 8-6
Economic vs. Accounting Profits
• Economists include all costs in economic costs,
both implicit costs and explicit costs.
• Accountants include only explicit costs.
• Profit equals total revenue minus total costs.
– Economic profit, then, is smaller than accounting
profit because more costs are subtracted:
Economic profit = Total revenue – Explicit costs – Implicit costs
Accounting profit = Total revenue – Explicit costs only
Economic profit = Accounting profit – Implicit costs
7. 8-7
Normal Profit
• Normal profit: the opportunity cost of capital.
– The owner could have invested these resources
elsewhere. If the opportunity cost is a lost return of
10%, then the owner will expect at least a 10%
return in this business, preferably higher.
– Normal profit is equivalent to an implicit cost.
– It is earned if economic profit is zero, which, maybe
surprisingly, is the typical case.
• A productive activity reaps an economic profit
only if it earns more than its opportunity cost.
8. 8-8
Entrepreneurship and Risk
• The entrepreneur will go into business only if
the prospect of earning more there is greater
than the alternative use of resources.
– The owner expects a return of more than a normal
profit.
– There is no guarantee of profit. Thus the owner is
willing to undertake the risk of suffering economic
losses.
– The inducement to face this risk is the potential for
economic profit.
9. 8-9
Market Structure
• Market structure: the number and relative size
of firms in an industry.
• The market structures range from monopoly at
one extreme to perfect competition at the other
extreme. Most real-world firms are along the
continuum of imperfect competition.
10. 8-10
A Survey of Market Structures
• Perfect competition: a market in which no
buyer or seller has market power.
• Monopolistic competition: many firms, a
little market power.
• Oligopoly: a few firms, considerable market
power.
• Duopoly: two firms.
• Monopoly: one firm only.
11. 8-11
Perfect Competition
• Characteristics:
– Many firms compete for consumer purchases.
– The products of each firm are identical.
– Low entry barriers make it easy to get into the
business.
– No firm has any market power, thus they cannot
manipulate the price. They are price takers.
– Each firm’s output is small relative to the total
market amount.
12. 8-12
Market Demand vs. Firm Demand
Although the entire market has a typical downward-
sloping demand curve, the individual firm perceives its
demand curve to be horizontal.
13. 8-13
A Firm’s Demand Curve
• Why horizontal?
– The firm is a price taker. It will charge only the
market price.
– If it raises its price, nobody will buy.
– If it lowers its price, it will sell out, but it can do that
at the market price.
– It can sell increased quantities at the market price.
• If you draw a line for any quantity at the
market price, the line will be horizontal.
14. 8-14
The Production Decision
• There are no pricing decisions. Firms take
the market price.
• There are no quality decisions since all
products are identical.
• The only decision left is how much to
produce.
– This is the production decision.
15. 8-15
The Production Decision
• A firm’s goal is to
maximize profits, not
revenues.
• Profit equals total
revenue (price X
quantity) minus total
costs.
• The goal is to find the
output that maximizes
profits.
• Is h that output?
16. 8-16
The Production Decision
• Never produce a unit
of output that yields
less revenue than it
costs.
• Marginal revenue
(MR) is equal to price,
the added amount
received from selling
one more unit.
MR = Change in total revenue
Change in output
17. 8-17
The Production Decision
• As output increases,
marginal cost (MC)
increases, squeezing the
profit from the added
units.
• Compare P to MC:
– If P>MC, we add to profit
by selling that one.
– If P<MC, we make a loss
by selling that one.
– If P=MC, we make no
profit or loss on that one.
18. 8-18
Profit Maximization Rule
• For perfectly competitive firms,
– If P > MC, increase output and profits will grow.
– If P < MC, decrease output and losses will go away.
– If P = MC, produce this output because it is the
quantity at which profits are maximized.
• Profit maximization rule:
– Produce at that rate of output where marginal
revenue (MR = P) equals marginal cost (MC).
19. 8-19
Graphical Look at Profit Maximization
• Here we relate ATC
and MC to P=MR.
• To maximize profits,
choose the quantity
related to point b.
That is where MR=MC.
• Note that it is not the
same as maximum
profit per unit (point a)
or maximum revenues
(point c).
20. 8-20
The Shutdown Decision
• Shutting down the firm does not eliminate
all costs.
– Fixed costs must be paid even if all output
ceases.
– If a firm makes losses, it cannot pay all its fixed
costs and its variable costs.
– The firm will lose less by shutting down
(output=0) if losses from continuing production
exceed fixed costs.
21. 8-21
The Shutdown Decision
• Always set P=MR=MC to maximize profits or minimize losses.
• If prices fall below ATC, a loss is made.
• The firm should not shut down until the price falls below AVC. When this
happens the firm can’t pay its labor and suppliers, so shutting down is the
best option.
22. 8-22
The Investment Decision
• Investment decision: the decision to build, buy,
or lease plants and equipment or to enter or
exit an industry.
– The shutdown decision is a short-run decision.
– Investment decisions are long-run.
– Fixed costs are the owners’ investment in the
business. They must generate enough revenue to
recoup the investment.
– Investment will occur if the anticipated profits are
large enough to compensate for the effort and risk.
23. 8-23
Determinants of Supply
• A producer will increase output only if profits
are increasing. Conversely, a producer will
decrease output if profits are decreasing.
• Each of these determinants affects a producer’s
willingness and ability to supply a product:
– The price of factor inputs.
– Technology.
– Expectations.
– Taxes and subsidies.
24. 8-24
The Short-Run Supply Curve
• The supply curve shows the quantity a
producer is willing to supply at each price.
• The profit maximization rule leads us to the
short-run supply curve.
– At each price, the producer sets output where
MR=MC.
– The producer resets this output when price
changes.
• Raise the price, produce more.
• Lower the price, produce less.
• The marginal cost curve is the firm’s short-run
supply curve.
25. 8-25
Supply Shifts
• If any determinant of supply changes, the
supply curve shifts.
– A change that lowers costs will cause the supply
curve to shift right.
– A change that raises costs will cause the supply
curve to shift left.
26. 8-26
Tax Effects
• Raising property taxes.
– Fixed costs and total costs rise, but MC does not. So
there is no change in the production decision.
• Raising payroll taxes.
– Variable costs and total costs rise, but MC rises also.
The MC curve will shift upward to the left, and
production output will be decreased.
• Raising profit taxes.
– Neither fixed nor variable costs are changed. But
owners receive less return and may reduce
investment in new business.
Editor's Notes
Ask a businessman if he is in favor of competition, and he will probably answer “yes.”
In reality, competition makes him work harder to be profitable. He would really like no competition.
These objectives will be the basis for chapter review.
Possible discussion: Is profit a good thing? Or should a firm operate only to serve the needs of society?
You could generate quite a spirited discussion here. Many students have been sufficiently indoctrinated by media against the profit motive.
Implicit costs are difficult for some students to grasp.
You could build a picture where a commuter, tired of the rat race, is considering quitting her job and opening a business.
What would she have to give up to do this? Obviously her day job. Maybe some savings that are earning interest. Maybe some assets she owns, like a building that she could lease. It wouldn’t be too hard to calculate the opportunity costs of lost salary and redeployment of assets as implicit costs of starting a business.
Economists want to see the receivers of a good (the customers) pay exactly the cost of the resources used in producing that good.
If they pay more, economic profit exists.
If they pay less, economic losses exist.
If they pay exactly that amount, no economic profits exist, but the resources we cited as implicit costs are paid for.
This is normal profit.
A prospective businessperson should do homework before jumping in.
If this person can’t see a return of more than the normal profit (what those assets are earning now), then the decision to start the business should be “no.”
Obviously there is uncertainty, and the risk factor needs to be included in the calculation.
This figure serves as a good introduction to the next few chapters.
This is further introduction to the next few chapters.
This is the first, and simplest to describe, market structure.
Example: An egg rancher takes his eggs to a central location where they are cleaned and graded.
He is one of many farmers to do so. On the way into the facility, the current buying price is posted.
It doesn’t matter how many eggs he has; that’s the price. So quantity can be higher or lower, but the price is the same.
Sketch that out on a graph, and the perceived demand curve is horizontal.
Example: T-shirts sell for $5 at dozens of shops all over the boardwalk.
You insist on $10 for your shirts. What will the customers do?
Also, you would sell for $4 only if you wanted to get home early since you can sell all you have for $5.
Remember, this is the simple case.
There is no quality difference or price difference between competitors.
The only question left is “How many to produce?”
You could point out the break-even point f.
You could point out that if you produce too much, costs will eat you up (point g).
Somewhere between points f and g, profits maximize.
It is difficult to identify point h as that point.
On this graph, it is much easier to find the profit-maximizing quantity.
Profits grow as long as we produce those units where MR=P=MC.
At the intersection of MR=P and MC, profits cease to be added.
If we go beyond that point, MR=P < MC, and we make a loss on each unit we produce.
Clearly profits max out when we reach the intersection.
If a firm finds itself producing where MR=P < MC, it should cut back production, getting rid of those units on which it is losing money. Profits will rise.
Summary slide.
Here is a good way to contrast some decisions a firm faces.
Produce at the lowest cost per unit (point a)?
Produce at maximum revenue (point c)?
Produce at maximum profit (point b)?
Firms make losses sometimes.
Most react by either boosting sales (if possible) or reducing costs.
Their intention is to get back to profitability.
However, at times the best decision is to shut down.
No production eliminates VC; only FC remain.
As price falls, what was a profit becomes a loss.
P falling below ATC generates a loss.
If P falls below AVC, it is time to shut down.
Now we are in the long run.
The investment decision concerns paying for fixed inputs and incurring FC.
Shutdown is short-run in that it can be reversed.
Closing a factory and selling its assets is a long-run decision.
Same for opening a factory.
This is a review of the law of supply and the determinants of supply.
The MC curve relates to how much quantity the firm will produce at any given price.
Thus it is the firm’s supply curve (above the AVC minimum; shut down if below).
If supply shifts right, the firm’s MC shifts right, and vice versa.
“Let’s raise taxes on business.”
Which tax gets raised or lowered is significant.
Want more production? Lower payroll taxes and profit taxes.
Want less production? Well …