ECON 1000 Chapter Notes - Chapter 12: Technological Change, Sunk Costs, Market Power

• School: York University
• Department: Economics
• Course: ECON 1000
• Professor: Andrea Podhorsky

Document Summary

Examples: farming, fishing, wood pulping and paper milling, paper cups, shopping bags, grocery and fresh flower retailing, photo finishing, lawn services, plumbing, painting, dry cleaning and laundry services. Perfect competition arises when if the minimum efficient scale of a single producer is relatively small to the market demand for the good or service. Each firm produces a good that has no unique characteristics. Price takers a firm that cannot influence the market price because its production is an insignificant part of the total market: each firm is a price taker in a perfectly competitive market. Demand curve for each individual firm is horizontal; products in this market are perfectly elastic; demand curve also equals marginal revenue curve. A firm must decide: how to produce at minimum cost, what quantity to produce, whether to enter or exit a market. From a firm"s cost and revenue curves, we can find the output that maximizes the firm"s economic profit.