Chapter 8 Profit Maximization and Competitive Supply
Chapter 8 Profit Maximization and Competitive Supply
Topics to be Discussed a Perfectly Competitive Markets ■ Profit maximization a Marginal Revenue, Marginal Cost, and Profit maximization a Choosing Output in the Short-Run Chapter 8 Slide 2
Chapter 8 Slide 2 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 a The Competitive Firm's Short-Run Supply Curve a Short-Run Market Supply a Choosing Output in the Long-Run a The Industry's Long-Run Supply Curve Chapter 8 Slide 3
Chapter 8 Slide 3 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 a Characteristics of Perfectly competitive Markets Price taking 2)Product homogeneity 3) Free entry and exit Chapter 8 Slide 4
Chapter 8 Slide 4 Perfectly Competitive Markets ◼ Characteristics of Perfectly Competitive Markets 1) Price taking 2) Product homogeneity 3) Free entry and exit
Perfectly Competitive Markets a Price Taking o The individual firm sells a very small share of the total market output and, therefore, cannot influence market price o The individual consumer buys too small a share of industry output to have any impact on market price Chapter 8 Slide 5
Chapter 8 Slide 5 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