ECON 201 Lecture Notes - Lecture 14: Dry Cleaning, Joseph Schumpeter, Austrian School
Document Summary
Long run comparison (perfect competition & mono competition) profits & atc: similarities. Q* at min point on atc in lr. Costs a(cid:396)e highe(cid:396) (cid:448)a(cid:396)iet(cid:455), (cid:395)ualit(cid:455), st(cid:455)le, se(cid:396)(cid:448)i(cid:272)e, ad(cid:448)e(cid:396)tisi(cid:374)g: advertising: Mono comp: yes (reduces search time: d(cid:455)(cid:374)a(cid:373)i(cid:272) co(cid:373)petitio(cid:374), i(cid:374)(cid:374)o(cid:448)atio(cid:374), & busi(cid:374)ess failu(cid:396)es (cid:858)exit(cid:859) Alternative term: oxymoron (cid:862)c(cid:396)eati(cid:448)e destruction(cid:863: summary of creative destruction: Release not destroy resources (assets owned, skills of workers: business failures lead to dynamic competition (examples) Some firms expand (some contract: examples: when some firms contract, others expand: 10% of total businesses in u. s are newly incorporated. O(cid:373)eti(cid:373)es e(cid:374)gage i(cid:374) (cid:858)p(cid:396)i(cid:272)e dis(cid:272)(cid:396)i(cid:373)i(cid:374)atio(cid:374)(cid:859: defi(cid:374)itio(cid:374): cha(cid:396)ge diffe(cid:396)e(cid:374)t p(cid:859)s to diffe(cid:396)e(cid:374)t g(cid:396)oups of (cid:272)o(cid:374)su(cid:373)e(cid:396)s, 2 requirements: Identify & separate at least 2 groups with different ed. Va(cid:272)atio(cid:374)e(cid:396)s & stude(cid:374)ts d is elasti(cid:272: stay saturday night, make reservation in advance, travel off peak hours, low income people- small town doctor charge diff. prices.
