Class Notes (1,100,000)
CA (640,000)
UTSC (30,000)
MGEA02H3 (200)
Lecture 2

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


Department
Economics for Management Studies
Course Code
MGEA02H3
Professor
Michael Krashinsky
Lecture
2

This preview shows pages 1-3. to view the full 41 pages of the document.
1
MGEA02 - Week 9
This week:
- What defines long-run equilibrium in a
perfectly competitive market?
- What is different for the firm and the
industry in long-run equilibrium?
- Is perfect competition good for society
does it promote economic well-being
(i.e., economic welfare)?
- Graphic and algebraic examples of
shocksand movements to short and
long run equilibrium

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

2
What is the short run?
- 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.
What is the long run?
- 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

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

3
SR
capital is fixed (firm)
no entry or exit (industry)
LR
all inputs variable (firm)
free entry and exit (industry)
Because of potential entry and exit, supply
is more responsive in the long run (more
elastic).
You're Reading a Preview

Unlock to view full version