tailieunhanh - Lecture Microeconomics: Chapter 9 - Besanko, Braeutigam

Chapter 9 - Perfectly competitive markets. This chapter presents the following content: Introduction, perfect competition defined, the profit maximization hypothesis, the profit maximization condition, short run equilibrium, long run equilibrium. | Perfectly Competitive Markets Chapter 9 Copyright (c)2014 John Wiley & Sons, Inc. 1 1 2 Chapter Nine Overview Introduction Perfect Competition Defined The Profit Maximization Hypothesis The Profit Maximization Condition Short Run Equilibrium Short Run Supply Curve for the Firm Short Run Market Supply Curve Short Run Perfectly Competitive Equilibrium Producer Surplus Long Run Equilibrium Long Run Equilibrium Conditions Long Run Supply Curve Chapter Nine Copyright (c)2014 John Wiley & Sons, Inc. 3 Chapter Nine A perfectly competitive market consists of firms that produce identical products that sell at the same price. Each firm’s volume of output is so small in comparison to the overall market demand that no single firm has an impact on the market price. Perfectly Competitive Markets Copyright (c)2014 John Wiley & Sons, Inc. 4 Chapter Nine A. Firms produce undifferentiated products in the sense that consumers perceive them to be identical B. Consumers have perfect information about the | Perfectly Competitive Markets Chapter 9 Copyright (c)2014 John Wiley & Sons, Inc. 1 1 2 Chapter Nine Overview Introduction Perfect Competition Defined The Profit Maximization Hypothesis The Profit Maximization Condition Short Run Equilibrium Short Run Supply Curve for the Firm Short Run Market Supply Curve Short Run Perfectly Competitive Equilibrium Producer Surplus Long Run Equilibrium Long Run Equilibrium Conditions Long Run Supply Curve Chapter Nine Copyright (c)2014 John Wiley & Sons, Inc. 3 Chapter Nine A perfectly competitive market consists of firms that produce identical products that sell at the same price. Each firm’s volume of output is so small in comparison to the overall market demand that no single firm has an impact on the market price. Perfectly Competitive Markets Copyright (c)2014 John Wiley & Sons, Inc. 4 Chapter Nine A. Firms produce undifferentiated products in the sense that consumers perceive them to be identical B. Consumers have perfect information about the prices all sellers in the market charge Perfectly Competitive Markets - Conditions Copyright (c)2014 John Wiley & Sons, Inc. 5 Chapter Nine C. Each buyer’s purchases are so small that he/she has an imperceptible effect on market price. D. Each seller’s sales are so small that he/she has an imperceptible effect on market price. Each seller’s input purchases are so small that he/she perceives no effect on input prices E. All firms (industry participants and new entrants) have equal access to resources (technology, inputs). Perfectly Competitive Markets - Conditions Copyright (c)2014 John Wiley & Sons, Inc. 6 Chapter Nine Implications of Conditions The Law of One Price: Conditions (a) and (b) imply that there is a single price at which transactions occur. Price Takers: Conditions (c) and (d) imply that buyers and sellers take the price of the product as given when making their purchase and output decisions. Free Entry: Condition (e) implies that all firms have identical long run cost .