中微课件ch10章节幻灯片.pptVIP

* Long-Run Equilibrium: Decreasing-Cost Industry A Typical Firm (before entry) Total Market q1 Quantity Quantity SMC’ MC’ AC’ S D P1 Q1 The long-run industry supply curve will be downward-sloping D’ P3 Q3 q3 S’ LS Price Price * Classification of Long-Run Supply Curves Constant Cost entry does not affect input costs the long-run supply curve is horizontal at the long-run equilibrium price Increasing Cost entry increases inputs costs the long-run supply curve is positively sloped * Classification of Long-Run Supply Curves Decreasing Cost entry reduces input costs the long-run supply curve is negatively sloped * Long-Run Elasticity of Supply The long-run elasticity of supply (eLS,P) records the proportionate change in long-run industry output to a proportionate change in price eLS,P can be positive or negative the sign depends on whether the industry exhibits increasing or decreasing costs * Comparative Statics Analysis of Long-Run Equilibrium Comparative statics analysis of long-run equilibria can be conducted using estimates of long-run elasticities of supply and demand Remember that, in the long run, the number of firms in the industry will vary from one long-run equilibrium to another * Comparative Statics Analysis of Long-Run Equilibrium Assume that we are examining a constant-cost industry Suppose that the initial long-run equilibrium industry output is Q0 and the typical firm’s output is q* (where AC is minimized) The equilibrium number of firms in the industry (n0) is Q0/q* * Comparative Statics Analysis of Long-Run Equilibrium A shift in demand that changes the equilibrium industry output to Q1 will change the equilibrium number of firms to n1 = Q1/q* The change in the number of firms is completely determined by the extent of the demand shift and the optimal output level for the typical firm * Comparative Statics Analysis of Long-Run Equilibrium The effect of a change in input prices is more complicated we need to know how much minimum average cost is affect