tailieunhanh - Tài liệu trung cấp môn Kinh tế vi mô bằng tiếng Anh - Phần 23

Tài liệu tham khảo Tài liệu trung cấp môn Kinh tế vi mô bằng tiếng Anh gồm 41 phần giúp sinh viên khoa kinh tế học tốt môn Kinh tế vi mô. Tài liệu này là phần 23 giới thiệu về " Firm supply " | CHAPTER 22 FIRM SUPPLY In this chapter we will see how to derive the supply curve of a competitive firm from its cost function using the model of profit maximization. The first thing we have to do is to describe the market environment in which the firm operates. Market Environments Every firm faces two important decisions choosing how much it should produce and choosing what price it should set. If there were no constraints on a profit-maximizing firm it would set an arbitrarily high price and produce an arbitrarily large amount of output. But no firm exists in such an unconstrained environment. In general the firm faces two sorts of constraints on its actions. First it faces the technological constraints summarized by the production function. There are only certain feasible combinations of inputs and outputs and even the most profit-hungry firm has to respect the realities of the physical world. We have already discussed how we can summarize the technological constraints and we ve seen how the technological 384 FIRM SUPPLY Ch. 22 constraints lead to the economic constraints summarized by the cost function. But now we bring in a new constraint or at least an old constraint from a different perspective. This is the market constraint. A firm can produce whatever is physically feasible and it can set whatever price it wants . but it can only sell as much as people are willing to buy. If it sets a certain price p it will sell a certain amount of output x. We call the relationship between the price a firm sets and the amount that it sells the demand curve facing the firm. If there were only one firm in the market the demand curve facing the firm would be very simple to describe it is just the market demand curve described in earlier chapters on consumer behavior. For the market demand curve measures how much of the good people want to buy at each price. Thus the demand curve summarizes the market constraints facing a firm that has a market all to itself. But if .