🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →

HomeClass Notes1,200,000CA670,000

MGEA02H3 Lecture Notes - Lecture 2: Perfect Competition, Economic Surplus, Demand Curve

71 views41 pages

20 Jan 2018

School

Department

Economics for Management Studies

Course

Professor

Michael Krashinsky

For unlimited access to Class Notes, a Class+ subscription is required.

wanyiwu and 39094 others unlocked

MGEA02H3 Full Course Notes

MGEA02H3 Full Course Notes

Document Summary

Shocks and movements to short and long run equilibrium. A period of time too short for firms to change the amount of capital equipment they are currently using. A period of time too short for new firms to enter the industry or for existing firms to permanently exit. A period of time long enough so that the firm can change its amount of capital equipment so as to produce at the lowest possible average cost. A period of time long enough for firms to enter or exit the industry in response to profit or loss. Because of potential entry and exit, supply is more responsive in the long run (more elastic). In the long run, each firm will want to hire capital and labour in the right proportions to allow it to produce at lowest possible average cost (qmes) Choose capital equipment such that q = min on lrac.

Related Documents

MGEA02H3- Final Exam Guide - Comprehensive Notes for the exam ( 43 pages long!)

MGEA02H3 Lecture Notes - Lecture 2: Plywood, Deadweight Loss, Opportunity Cost

MGEA02H3 Study Guide - Quiz Guide: Perfect Competition, Economic Equilibrium, Demand Curve

erinalligator902

Related Questions

1.
If firms in a monopolistically competitive market are earningpositive profits,
A) firms will likely be subject to regulation.
B) barriers to entry will be strengthened.
C) some firms must exit the market.
D) new firms will enter the market.
2.

Panel c in the set of figures shown is consistent with a firm in amonopolistically competitive market that is

A) earning profit and is in both short-run and long-runequilibrium.
B) earning economic profit and is in short-run equilibrium, but notlong-run equilibrium.
C) earning profit and is in long-run equilibrium, but not short-runequilibrium.
D) earning a negative profit and is not in equilibrium.
3.
When a profit-maximizing firm in a monopolistically competitivemarket is producing the long-run equilibrium quantity,
A) its marginal revenue will exceed its marginal cost.
B) its average revenue will equal its marginal cost.
C) it will be earning positive economic profits.
D) its demand curve will be tangent to its average-total-costcurve.
4.
Monopolistic competition differs from perfect competition becausein monopolistically competitive markets
A) each of the sellers offers a somewhat different product.
B) strategic interactions between firms is vitally important.
C) there are barriers to entry.
D) all firms can eventually earn economic profits.
5.
The free entry and exit of firms in a monopolistically competitivemarket guarantees that
A) economic losses can persist into the long run, but not economicprofits.
B) both economic profits and economic losses can persist into thelong run.
C) economic profits can persist into the long run, but not economiclosses.
D) both economic profits and economic losses disappear in the longrun.
6.

Panel (a) shows a profit-maximizing monopolistically competitivefirm that is

A) All answers are correct
B) earning a zero profit.
C) charging a price that is equal to average total cost.
D) in long-run equilibrium.
7.
Since a firm in a monopolistically competitive market faces a
A) perfectly elastic demand curve, it will always operate withexcess capacity.
B) downward-sloping demand curve, it will always operate atefficient scale.
C) perfectly inelastic demand curve, it will always operate atefficient scale.
D) downward-sloping demand curve, it will always operate withexcess capacity.
8.
In a monopolistically competitive market,
A) firms can enter or exit the market without restriction.
B) each firm takes the price of its product as given.
C) each firm produces a product that is essentially identical tothe products of other firms in the market.
D) there are only a few sellers.
9.
The fact that there is a great deal of advertising of menâs shavingproducts indicates that
A) it costs firms very little to produce those products.
B) the market for those products is perfectly competitive.
C) those products are highly differentiated.
D) All answers are correct
10.
A profit-maximizing firm in a monopolistically competitive marketdiffers from a firm in a perfectly competitive market because thefirm in the monopolistically competitive market
A) has no barriers to entry.
B) faces a downward-sloping demand curve for its product.
C) faces a horizontal demand curve at the market clearingprice.
D) is characterized by market share maximization.

A perfectly competitive industry is initially in a short-run equilibrium in which all firms are earning zero economic profits but are operating below their minimum efficient scale. Explain the long-run adjustments that will create equilibrium with firms operating at their minimum efficient scale. Why is a perfect competitive firm associated with efficiency for both consumers and businesses?

aquamarinescorpion184

A perfectly competitive industry is initially in a short-run equilibrium in which all firms are earning zero economic profits but are operating below their minimum efficient scale. Explain the long-run adjustments that will create equilibrium with firms operating at their minimum efficient scale. Why is a perfect competitive firm associated with efficiency for both consumers and businesses?

chocolaterabbit394