EC239 Lecture Notes - Lecture 7: The Intercept, Autarky, Monopolistic Competition
Document Summary
Lesson 7- firms in the global economy: export decisions, outsourcing, & multinational enterprises. Internal economies make it profitable to produce not only for the domestic market, but also the foreign market. In the lr, nothing happens to profits, protecting the monopolist: mo(cid:374)opolists are(cid:374)"t al(cid:449)a(cid:455)s guara(cid:374)teed to ear(cid:374) a profit. If the producer leaves, there is no more industry: mc = smonopoly firm / sindustry, co(cid:374)su(cid:373)ers do(cid:374)"t like (cid:373)o(cid:374)opolies (cid:271)e(cid:272)ause the(cid:455) (cid:272)harge (cid:373)ore. Initial sales q; the > the initial sales the larger the gap: the slope (1/b) of the d curve; the steeper the d curve (lower the value of b), the larger the gap. = (f/q)+c: average cost decreases with more input produces, economies of scale will make a larger firm more efficient. In a monopolistically competitive market, a large # of firms produce the same good but their produ(cid:272)ts are differe(cid:374)tiated fro(cid:373) ea(cid:272)h other"s produ(cid:272)t.
