chapter_8 Profit Maximization and Competitive Supply 平狄克微观英文版教材.pptVIP

Chapter 8;Topics to be Discussed;Topics to be Discussed;Perfectly Competitive Markets;Perfectly Competitive Markets;Perfectly Competitive Markets;Profit Maximization;Profit Maximization;Profit Maximization;Marginal Revenue, Marginal Cost,and Profit Maximization;Profit Maximization in the Short Run;0;Marginal revenue is the additional revenue from producing one more unit of output. Marginal cost is the additional cost from producing one more unit of output.;Comparing R(q) and C(q) Output levels: 0- q0: C(q) R(q) Negative profit FC + VC R(q) MR MC Indicates higher profit at higher output;Comparing R(q) and C(q) Question: Why is profit negative when output is zero?;Comparing R(q) and C(q) Output levels: q0 - q* R(q) C(q) MR MC Indicates higher profit at higher output Profit is increasing;Comparing R(q) and C(q) Output level: q* R(q)= C(q) MR = MC Profit is maximized;Question Why is profit reduced when producing more or less than q*? ;Comparing R(q) and C(q) Output levels beyond q*: R(q) C(q) MC MR Profit is decreasing;Therefore, it can be said: Profits are maximized when MC = MR.;Marginal Revenue, Marginal Cost,and Profit Maximization;Marginal Revenue, Marginal Cost,and Profit Maximization;The Competitive Firm Price taker Market output (Q) and firm output (q) Market demand (D) and firm demand (d) R(q) is a straight line;Demand and Marginal Revenue Facedby a Competitive Firm;The Competitive Firm The competitive firm’s demand Individual producer sells all units for $4 regardless of the producer’s level of output. If the producer tries to raise price, sales are zero.;The Competitive Firm The competitive firm’s demand If the producers tries to lower price he cannot increase sales P = D = MR = AR;The Competitive Firm Profit Maximization MC(q) = MR = P;Choosing Output in the Short Run;q0;Would this producer continue to produce with a loss?;Choosing Output in the Short Run;The Short-Run Output ofan Aluminum Smelting Plant;Some Cost Considerations for Managers;So