ECON 1 Lecture Notes - Lecture 6: Competitive Equilibrium, Microsoft Powerpoint, Marginal Cost
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Econ 1 - lecture 6 - cost and supply. Profit = white height - red height. To maximize profit, we should match the highest whites with the smallest reds. If we try to make as many profitable pairings as possible, the total profit is less than only choosing the tall whites and the short reds. Who trades with who matters in an economic system, or rather who trades and who doesn"t. Suppose pairs split profit when maximizing salles. Competitive equilibrium is efficient, but may not be equitable. You can only buy and sell one unit. It only represents one point in time. Can buy any amount of a good. Discrete units for some goods and services (pencils, haircuts) Continuous units for others (gasoline, time of a tutor) Can buy as often as we want. Demand curve: quantity per period, buyers willing to buy for each possible price. Supply curve: quantity per period, sellers willing to sell for each possible price.
