Lecture15(200511.8) a Chapter 5 choices Chapter 6 p141--150 Chapter 6: Perfectly Competitive Supply Slide 1
MB MC Chapter 6: Perfectly Competitive Supply Slide 1 Lecture 15 (2005.11.8) ◼ Chapter 5 choices ◼ Chapter 6 p141----150
PERfectly Competitive Supply: The Cost Side of The Market CHAPTER MB MC
MB MC Perfectly Competitive Supply: The Cost Side of The Market
MB MC Overview a Chapter 6 presents the supply side of the market using an approach parallel to that of the demand side of the market in Chapter 5. The chapter presents the material in a way that illustrates the second core principle of the textbook, that marginal benefits should equal marginal costs Chapter 5 presents the demand curve as derived from marginal benefit and Chapter 6 presents the supply curve as derived from marginal costs These two chapters provide the details behind the principle that MC= MB and give students a solid basis for understanding and applying it in a variety of situations Chapter 6: Perfectly Competitive Supply Slide 3
MB MC Chapter 6: Perfectly Competitive Supply Slide 3 Overview ◼ Chapter 6 presents the supply side of the market, using an approach parallel to that of the demand side of the market in Chapter 5. The chapter presents the material in a way that illustrates the second core principle of the textbook, that marginal benefits should equal marginal costs. Chapter 5 presents the demand curve as derived from marginal benefit and Chapter 6 presents the supply curve as derived from marginal costs. These two chapters provide the details behind the principle that MC = MB and give students a solid basis for understanding and applying it in a variety of situations
MB MC Overview The chapter illustrates concepts using recycling as an example. First, individual supply decisions are discussed, followed by discussion of the supply decision of a perfectly competitive firm. The determinants of supply are revisited in the chapter and price elasticity of supply is presented(e.g definition, calculation, ranges, determinants) Finally, the chapter uses the production possibilities curve from chapter 3 to generate supply curves using the PPC model Chapter 6: Perfectly Competitive Supply Slide 4
MB MC Chapter 6: Perfectly Competitive Supply Slide 4 Overview ◼ The chapter illustrates concepts using recycling as an example. First, individual supply decisions are discussed, followed by discussion of the supply decision of a perfectly competitive firm. The determinants of supply are revisited in the chapter and price elasticity of supply is presented (e.g. definition, calculation, ranges, determinants). Finally, the chapter uses the production possibilities curve from chapter 3 to generate supply curves using the PPC model
M Thinking About Supply: The Importance of Opportunity Cost ■ EXample6.1 o How much time should Harry spend recycling soft drink containers Harry is choosing between washing dishes for $6/hour and collecting containers at 2 cents each Opportunity cost of collecting cans is S6/hour Chapter 6: Perfectly Competitive Supply Slide 5
MB MC Chapter 6: Perfectly Competitive Supply Slide 5 Thinking About Supply: The Importance of Opportunity Cost ◼ Example 6.1 ⚫ How much time should Harry spend recycling soft drink containers? ◼ Harry is choosing between washing dishes for $6/hour and collecting containers at 2 cents each. ◼ Opportunity cost of collecting cans is $6/hour