Chap_14 Firms in Competitive Markets完全竞争市场.pptVIP

The Short Run: Market Supply with a Fixed Number of Firms For any given price, each firm supplies a quantity of output so that its marginal cost equals price. The market supply curve reflects （反映） the individual firms’ marginal cost curves. The Short Run: Market Supply with a Fixed Number of Firms... (a) Individual Firm Supply Quantity (firm) 0 Price (b) Market Supply Quantity (market) Price 0 Supply MC 1.00 $2.00 100 200 1.00 $2.00 100,000 200,000 The Long Run: Market Supply with Entry and Exit Firms will enter or exit the market until profit is driven to zero. In the long run, price equals the minimum of average total cost. The long-run market supply curve is horizontal （水平的）at this price. The Long Run: Market Supply with Entry and Exit... (a) Firm’s Zero-Profit Condition Quantity (firm) 0 Price P = minimum ATC (b) Market Supply Quantity (market) Price 0 Supply MC ATC The Long Run: Market Supply with Entry and Exit At the end of the process of entry and exit, firms that remain must be making zero economic profit. The process of entry exit ends only when price and average total cost are driven to equality. Long-run equilibrium（均衡） must have firms operating at their efficient scale. Firms Stay in Business with Zero Profit Profit equals total revenue minus total cost. Total cost includes all the opportunity costs of the firm. In the zero-profit equilibrium, the firm’s revenue compensates the owners for the time and money they expend to keep the business going. Increase in Demand in the Short Run An increase in demand raises price and quantity in the short run. Firms earn profits because price now exceeds average total cost. Increase in Demand in the Short Run... Market Firm Quantity (firm) 0 Price MC ATC P1 Quantity (market) Price 0 D1 P1 Q1 A S 1 Long-run supply (a) Initial Condition （初始情形） P D2 Increase in Demand in the Short Run... Market Firm Quantity (firm) 0 Price MC ATC P1 Quantity (market) Price 0 D1 P1 Q1 A S1 Long-run supply (b) Short-Run Response （短