Class Notes - 11-9-07

Class Notes - 11-9-07 - Microeconomics Class Notes 11/9/07...

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Microeconomics – Class Notes – 11/9/07 CHAPTER 9 – LECTURE #1 Competitive Markets I. Characteristics of Perfect Competition Each individual firm cannot affect the market outcome A. Many firms B. Identical Products All of these firms produce perfectly identical products (Perfectly elastic demand curve?) Each firm is a price taker 1. Price Takers a. The firms have no ability to influence the market whatsoever b. The firm demand curve is perfectly elastic 2. Firm demand is perfectly elastic C. Free entry and exit a. Movement of firms into and out of an industry that is NOT blocked by regulation or any other barriers b. Low cost to enter and no barriers to exit 1. Free entry and exit determines existence Long-Run equilibrium 2. After the firm completes entry and exit, profit = 0 (profits are zero) a. If one firm is making a profit, other firms will come in and become competitive, taking the profits away from the first firm (this will happen in the long-run ) II. Long Run Equilibrium in Constant Cost Industry
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This note was uploaded on 04/15/2008 for the course ECON 100 taught by Professor Stephaniemartin during the Fall '07 term at Allegheny.

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Class Notes - 11-9-07 - Microeconomics Class Notes 11/9/07...

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