ECO101H1 Lecture Notes - Marginal Revenue, Perfect Competition, Demand Curve
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ECO101H1 Full Course Notes
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Topic 8 perfect competition (week eight nov 1st - nov 10th) Outline: definition, total revenue, marginal revenue, and average revenue, profit maximizing output. - firm"s mc curve = firm"s ss curve (if p > avc); - shut down point: level of profits, entry and exit, short-run and long-run impact of a shift in demand, long-run market supply curve; - many buyers and sellers of identical product (so action of each buyer or seller exerts no impact on the market price); - freedom of entry and exit of firms (no barrier to entry/exit) - each firm is a price taker, meaning each firm faces an infinitely elastic demand curve at the market price; -- in the short run, the number of firms is fixed; In the long run, the number of firms can vary. Total revenue (the revenue of producing an additional unit of output) Dd/ss market demand/supply dd/ss individual firm"s demand/ market price supply.