L11 Econ 1011 Lecture 6: Perfectly Competative Supply

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The quantity that corresponds to any given price on the market supply curve is the sum of the quantities supplied at that price by all individual sellers in the market. The upward slope of the supply curve re ects that costs tend to rise at the margin when producers expand production: each individual exploits her most attractive opportunities rst, different potential sellers face different opportunity costs. Pro t: the total revenue a rm receives from the sale of its product minus all costs explicit and implicit incurred in producing it. Pro t-maximizing firm: a rm whose primary goal is to maximize the difference between its total revenues and total costs. If a potential seller identi es a pro table business opportunity in the market, he or she will be able to obtain the labor, capital, and other productive resources necessary to enter that market.

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