ECO-2023 Lecture Notes - Lecture 10: Price Discrimination, Linear Motor, Creative Destruction
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Document Summary
Price searcher graphs (downward sloping demand curves with marginal revenue less. Mr will be less than price then price: tr=p x q. Economic loss: price < atc: a firm making losses will remain open in the short-run if: Expects price to be high enough in the future to cover its costs. Otherwise, the firm will shut down: long-run equilibrium: when firms make an economic profit (loss), new firms will enter (exit), and drive price down (up) In the long-run, firms will make zero economic profit. Creative destruction: the replacement of old products and production methods by innovative new ones that consumers judge to be superior. This process creates economic growth and a higher standard of living. Entrepreneurship: an entrepreneur is a person who introduces new products or improved techniques; successful entrepreneurs will increase the value of resources. Price discrimination: a practice whereby a seller charges different consumers different prices for the same product/service.
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