Econ11Fall2007NotesForLecture_16Oct31 - Lecture XVI Prob...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Lecture XVI, October 31, 2007; Prob Set 4 Due Midterm Next Wed, Past Midterm Posted Next Monday Review Session Marathon Saturday, Nov 3, 9-11am in Monroe 321 I. Golden Rule for Price-Taking Firms to Maximize Profit II. Long Run Supply Curves with Free Entry III. Analysis of a School Uniform Requirement IV. Welfare Effects of Perfectly Competitive Equilibrium I. Golden Rule for price-taking firms to maximize profit A. Profit-maximizing output in the short run where: 1. P = MC S 2. P = AVC (Otherwise shut down), output = 0 B. Profit-maximizing output in the long run where: 1. P = MC L 2. P ‡ AC L (Otherwise exit the industry) II. Long Run Market Supply Curves With Free Entry and price taking firms A. Long-run equilibrium means no entry or exit 1. Firms earn normal profit in the short and long run – this only occurs at the bottom of bird's nest where: P = MC L = MC S = AC L = AC S B. External economies - effect of entry on costs of firms already in the industry and key to slope of long run supply:...
View Full Document

This note was uploaded on 04/18/2008 for the course ECON 011 taught by Professor Yezer during the Fall '07 term at GWU.

Page1 / 3

Econ11Fall2007NotesForLecture_16Oct31 - Lecture XVI Prob...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online