ECO100Y5 Chapter 12: ECO100 - Microeconomics Chapter 12 Textbook Notes
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ECO100Y5 Full Course Notes
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2. the industry must contain many producers, none of whom have a large market share the consumers regard the products of all producers as equivalent (standardized product/commodity) New producers can easily enter into or leave an industry. Ensures that the number of producers in an industry can adjust to changing market condition. Also ensures that producers in the industry cannot arti cial keep other rms out. The change in total revenue generated by an additional unit of output. If tr < tc, incurs a loss. Where mc cuts atc at its minimum. Minimum atc is the rm"s break-even price. Effect of increase in demand in sr & lr. Rst, prices and pro ts increase for existing producers. Then, there is an increase in output from new entrants (increase in suppliers) Higher output causes prices and pro ts to decrease. Lr slopes upward but it is always atter (more elastic) than sr. This is because of entry and exist.
