Microeconomics Chapter 6

Microeconomics Chapter 6 - Microeconomics Chapter 6 2:34:00...

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Microeconomics: Chapter 6 07/11/2007 14:34:00 NOTE: Pay extra attention to the difference between the FIRM and the MARKET. Market Supply The quantity that corresponds to any given price on the market supply curve  is the sum of the quantities supplied at that price by all individual sellers in the  market.  The fruit pickers rule:  Always pick the low hanging fruit first 1.  When fruit prices are low, it might not pay to harvest the fruit that grows  out of reach.   If fruit prices rise enough, it will pay to harvest not only the low hanging fruit  but also the fruit on higher branches.   Those with more attractive options will pick apples only if the price of apples  is relatively high. People facing unattractive employment opportunities in other occupations  may be willing to pick apples even when the price of apples is low. Profit Maximizing Firms and Perfectly Competitive Markets Definition:  The profit earned by a firm is the total revenue it receives from the  sale of its product minus all costs - explicit and implicit – incurred in producing  it.   A profit maximizing firm is one whose primary goal is to maximize the  difference between its total revenues and total costs. A perfectly competitive market is one in which no individual supplier has  significant influence on the market price of the product.  A price taker is a firm that has no influence over the price at which it sells its  product.  
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