Microeconomics I partie 4/9
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| Cartes-fiches | 40 |
|---|---|
| Langue | English |
| Catégorie | Economie politique |
| Niveau | Université |
| Crée / Actualisé | 06.06.2019 / 02.10.2023 |
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So MCs describes
the supply behaviour of the firm...provided that the firm produces at all.
Output rule
MR = MCs; price-taking behaviour implies
MR = p. Hence, profit maximisation gives p = MCs
Shutdowon condition
Supply condition: second order condition
Supply decision: first order condition
Demand curve facing a competitive firm graph
Assumptions of the perfect competition
Many firms, all making the same product.
Each firms output level is small relative to the total
Cost curves
Market structure according to degree of competition
Pure Competition
Many firms, all making the same product.
Each firms output level is small relative to the total
Monopolistic Competition
Many firms each making a slightly different product. Each firms output level is small relative to the
total
Dominant Firm
Many firms, but one much larger than the rest. The large firm’s decisions affect the payoffs of each small firm. Decisions by any one small firm do not noticeably affect the payoffs of any other firm
Oligopoly
A few firms, the decisions of each influencing the payoffs of the others
Monopoly
Just one seller that determines the quantity supplied and the market-clearing price
Market structures
Monopoly
Oligopoloy
Dominant firm
Monopolistic competition
Pure competition
Market environment
Are there many other firms, or just a few?
Do other firms’ decisions affect our firm’s payoffs?
Is trading anonymous, in a market? Or are trades arranged with separate buyers by middlemen?
Two type of constraints for the producer
I Technological constraints: What is feasible production? -> production function -> economic constraints -> cost function
I Market constraints: How much can be sold at what price? ! Demand curve facing the firm ! depends on market environment
Two decisions faced by producers
How much to produce
What price to set
Constant Returns-to-Scale and Total Costs
Increasing Returns-to-Scale and Total Costs
Decreasing Returns-to-Scale and Total Costs
Returns-to-Scale and Average Total Costs: graph
Returns-to-Scale and Average Total Costs
Short-run and long-run marginal cost curves 3
Short-run and long-run marginal cost curves 1
Short-run and long-run average cost curves 2
Short-run and long-run total cost curves graph2
Short-run and long-run total cost curves graph1
Link between marginal and variable cost functions
Average total cost curve
Average fixed cost curve
Average cost functions
Fixed costs. quasi fixed costs, sunk costs
Fixed costs are costs associated with the fixed factors, i.e. independent of the level of output, must be paid whether or not the firm produces
Quasi-fixed costs are costs that are also independent of the level of output, but only need to be paid if the firm produces a positive amount of output
Sunk costs are non recoverable costs
Short-run and long-run cost minimization diagram
Link between long-run and short-run cost function
Output expansion path
Income expansion path
Utility maximization VS cost minimization
Isocost line
Cost minimization problem
