ECON 1011 Lecture Notes - Lecture 23: Demand Curve, Marginal Revenue, Statics

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ECON 1011 Lecture Notes - Lecture 22: Marginal Revenue, Opportunity Cost, Marginal Cost

ECON 1011 Lecture Notes - Lecture 23: Demand Curve, Marginal Revenue, Statics

ECON 1011 Lecture Notes - Lecture 24: Demand Curve, Marginal Revenue, Statics

Document Summary

The market supply curve is the summation of the marginal cost curves of all the firms in the market above the shutdown price. Requirements: large number of agents (buyers and sellers, free entry and exit, homogenous goods, perfect information. There will be a supply and demand curve that intersect at price p. If there is a (cid:272)ha(cid:374)ge i(cid:374) pri(cid:272)e so that p (cid:271)e(cid:272)o(cid:373)es p", the demand curve will shift to intersect the supply curve at poi(cid:374)t p" (doesn"t (cid:373)atter if it is a(cid:374) i(cid:374)(cid:272)rease profit or decrease loss). As more firms join the market in a profit situation, marginal revenue decreases (therefore p decreases). E(cid:448)e(cid:374)tually, the slope of the se(cid:272)o(cid:374)d supply (cid:272)ur(cid:448)e (cid:449)ill get so lo(cid:449) that it (cid:449)ill i(cid:374)terse(cid:272)t p" demand curve when mc = atc (lowest point of atc), meaning there is no incentive to join the market. If a firm leaves the market in a loss situation, the opposite happens.

Related Questions

A. A competitive firm

can consider only its location in setting the price.
must base its competitive price on product differentiation.
has the ability to set its own price.
must accept the price determined by the intersection of the market supply and demand curves.
has no supply curve.

B. If a firm is making an economic profit, then

the factors of production are being paid their opportunity costs.
there will be no change in the number of firms if the industry is perfectly competitive.
the factors of production are being paid less than their opportunity costs.
the factors of production are being paid more than their opportunity costs.
the firm will exit the industry

C. Along a downward-sloping monopoly demand curve,

marginal revenue is greater than price.
the elasticity of demand is constant.
marginal revenue decreases when the price decreases.
marginal revenue is equal to zero when the price is equal to zero

D. If, in the short run, a perfectly competitive firm is producing at a point where the total cost is greater than total revenue, then the firm should

shut down because economic profits are negative.
continue to produce as long as P > AVC.
continue to produce because accounting profits are positive.
set a higher price for its output.
set a lower price for its output

E. For a perfectly competitive firm, the demand curve is

the marginal revenue curve.
perfectly inelastic.
always equal to marginal cost.
the same as the market demand curve

F. A firm in a(n) industry will have the most elastic demand curve

monopolistic
oligopolistic
monopolistically competitive
perfectly competitive

G. If the demand curve of a monopolist is in the inelastic range, then

total revenue will fall if the price increases.
total revenue will be unchanged if the price increases.
total revenue will rise if the price increases.
the total supply will increase by an equal amount if demand increases.
the price will be unchanged if total revenue increases

H. Monopolistic competition and oligopoly are examples of

monopoly.
perfect competition.
theories of consumer behavior.
imperfect competition.
the extreme cases on the market structure continuum

I. Under which market structure do firms face the flattest (most elastic) demand curve?

perfect competition
monopolistic competition
oligopoly
monopoly

J. At the point of long-run equilibrium for a perfectly competitive firm,

economic profits are zero.
TR > TC.
TR < TC.
P = AVC.
normal profits are zero.

brownlouse308

Consider a market that consists of n 2 identical firms. Each firm produces output at a constant average and marginal cost of 2. The market demand curve in this industry p = 20 - 2Q, where Q is the market demand and p is the price. Firms will choose output simultaneously.

(a) Find the symmetric Nash equilibrium.

(b) Show that as n becomes large the market output in this industry will approach the level of output under perfect competition.

yellowcrow897

(a) Find the symmetric Nash equilibrium.

(b) Show that as n becomes large the market output in this industry will approach the level of output under perfect competition.

viridiangerbil644

ECON 1011 Lecture Notes - Lecture 23: Demand Curve, Marginal Revenue, Statics

ECON 1011 Lecture Notes - Lecture 22: Marginal Revenue, Opportunity Cost, Marginal Cost

ECON 1011 Lecture Notes - Lecture 23: Demand Curve, Marginal Revenue, Statics

ECON 1011 Lecture Notes - Lecture 24: Demand Curve, Marginal Revenue, Statics

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