Ch23-Industry-Supply-中级微观经济学.pptVIP

Fixed Inputs and Economic Rent Q: When there is a barrier to entry, will not the firms already in the industry make positive economic profits? A: No. Each firm in the industry makes a zero economic profit. Why? Fixed Inputs and Economic Rent An input (e.g. an operating license) that is fixed in the long-run causes a long-run fixed cost, F. Long-run total cost, c(y) = F + cv(y). And long-run average total cost, AC(y) = AFC(y) + AVC(y). In the long-run equilibrium, what will be the value of F? Fixed Inputs and Economic Rent Think of a firm that needs an operating license -- the licen