01:220:102 Chapter Notes - Chapter 6: Production Function, Economic Equilibrium, Fixed Cost

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periwinkleelephant338

14 May 2020

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The seller"s problem has three parts: production, costs, and revenues. An optimizing seller makes decisions at the margin. The supply curve reflects a willingness to sell a good or service at various price levels. Producer surplus is the difference between the market price and the marginal cost curve. Sellers enter and exit markets based on profit opportunities. No buyer or seller is big enough to influence the market price. There is free entry and exit in the market. First and second are important because they ensure that agents are price-takers. Sell/buy as much as they want at market price. How do sellers decide what and how much to produce. Three elements of seller"s problem: making the goods, the cost of doing business, the rewards of doing business. Making the goods: how inputs are turned into outputs. Firm: business entity that produces and sells goods or services. Production: process by which the transformation of inputs to outputs occur.

Related Questions

A competitive market is a market in which:

1. there are only a few sellers.

2. the forces of supply and demand do not apply.

3. an auctioneer helps set prices and arrange sales.

4. no individual buyer or seller has any significant impact on the market price.

azurewoodchuck656

1. Characteristics of competitive markets

The model of competitive markets relies on these three core assumptions:

1.	There must be many buyers and sellers a few players can't dominate the market.
2.	Firms must produce an identical product buyer must regard all sellers' products as equivalent.
3.	Firms and resources must be fully mobile, allowing for free entry into and exit from the industry.

The first two conditions imply that all consumers and firms are price takers. While the third is not necessary for price-taking behaviour, assume for this problem that a market cannot maintain competition in the long run without free entry.

Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not.

Is the scenario	Competitive?
Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care who manufactures their socks.
In a major metropolitan area, one chain of coffee shops has gained a large market share because customers feel its coffee tastes better than that of its competitors.
Scholastik Inc. owns the U.S. copyright to a popular book series. It is the only company with the legal right to publish books in the series in the United States.
In a small town, there are two providers of broadband Internet access: a cable company and the phone company. The Internet access offered by both providers is of the same speed.

amberfly263

We'll use the example of an experiment like yours, but with slightly different numbers of buyers and sellers. In our example, there are 10 buyers and 10 sellers. Each of the buyers is willing to pay $100 for a high-quality MP3 player and $65 for a low-quality player. Each of the sellers can choose to produce high-quality players at a cost of $85 each or low-quality players at a cost of $55 each.

1.1.

Suppose a low-quality player is sold for $59. In this transaction, the buyer would receive a gain of ________ and the seller would receive a gain of _________, so the total gain from this transaction is _________.

		A. $6; $4; $10
		B. $5; $5; $10
		C. $6; $6; $12
		D. $8; $7; $15

limelocust771

01:220:102 Chapter Notes - Chapter 6: Production Function, Economic Equilibrium, Fixed Cost

01:220:102 Full Course Notes

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