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微观经济学Chapter 8- Profit Maximization and Competitive Supply
Chapter 1 Chapter 8 Profit Maximization and Competitive Supply Topics to be Discussed Perfectly Competitive Markets Profit Maximization Marginal Revenue, Marginal Cost, and Profit Maximization Choosing Output in the Short-Run Topics to be Discussed The Competitive Firm’s Short-Run Supply Curve Short-Run Market Supply Choosing Output in the Long-Run The Industry’s Long-Run Supply Curve Perfectly Competitive Markets Characteristics of Perfectly Competitive Markets 1) Price taking 2) Product homogeneity 3) Free entry and exit Perfectly Competitive Markets Price Taking The individual firm sells a very small share of the total market output and, therefore, cannot influence market price. The individual consumer buys too small a share of industry output to have any impact on market price. Perfectly Competitive Markets Product Homogeneity The products of all firms are perfect substitutes. Examples Agricultural products, oil, copper, iron, lumber Perfectly Competitive Markets Free Entry and Exit Buyers can easily switch from one supplier to another. Suppliers can easily enter or exit a market. Perfectly Competitive Markets Discussion Questions What are some barriers to entry and exit? Are all markets competitive? When is a market highly competitive? Profit Maximization Do firms maximize profits? Possibility of other objectives Revenue maximization Dividend maximization Short-run profit maximization Profit Maximization Do firms maximize profits? Implications of non-profit objective Over the long-run investors would not support the company Without profits, survival unlikely Profit Maximization Do firms maximize profits? Long-run profit maximization is valid and does not exclude the possibility of altruistic behavior. Marginal Revenue, Marginal Cost, and Profit Maximization Determining the profit maximizing level of output Profit ( ) = Total Revenue - Total Cost Total Revenue (R) = Pq Total Cost (C) = Cq Therefore: Profit Maximization in the Short Run Profit Maximizati
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