Class 13 Supply Curves and Marginal Revenue Fall 2016 (1) -...

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Supply Curves and Marginal RevenueHow perfectly-competitive firms would set output.If there are such firms.
The BIG ideasPerfectly competitive firms produce until MU=MCIrrelevant because there are no perfectly competitive firms. Monopolies produce where MC=Marginal RevenueAt MU=MC, firms lose money by not accounting for fixed inputsRational firms establish monopolies to raise prices, reducing production until MC=MRMonopolistic markets set prices with little regard for demand
Monopoly P and QPerfect Competitive P and QPriceOutput
Why do marginal costs rise?
Assumptions for PC Equilibrium:

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