{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Week9_2 - (on LRS curve Econ 2005 6 Comparing the Short-Run...

Info icon This preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
08/25/08 Econ 2005 1 Short-Run Firm Supply Curve Price below minimum AVC, firm shuts down; Q = zero Price above minimum AVC, firm produces up to the point where P=MC The short-run supply curve therefore is the ..
Image of page 1

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

View Full Document Right Arrow Icon
08/25/08 Econ 2005 2 Industry Supply Curve & Market Equilibrium The industry supply curve shows the relationship between the price of a good and the total output of the industry as a whole.
Image of page 2
08/25/08 Econ 2005 3 The Short-Run Market Equilibrium There is a short-run market equilibrium when the quantity supplied equals the quantity demanded, taking the number of producers as given.
Image of page 3

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

View Full Document Right Arrow Icon
08/25/08 Econ 2005 4 Long run equilibrium of a competitive industry
Image of page 4
08/25/08 Econ 2005 5 The Effect of an Increase in Demand in the Short- Run and the Long-Run D↑ P↑ non-zero profits entry S↑ P↓ back to zero profit
Image of page 5

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

View Full Document Right Arrow Icon
Image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: (on LRS curve) 08/25/08 Econ 2005 6 Comparing the Short-Run and Long-Run Industry Supply Curves The long-run industry supply curve is always flatter— more elastic —than the short-run industry supply curve. This is because of entry and exit : 08/25/08 Econ 2005 7 Three conclusions about the cost of production and efficiency in the long-run equilibrium of a perfectly competitive industry: 1) In a perfectly competitive industry in equilibrium, the value of marginal cost is the same for all firms. 2) In a perfectly competitive industry with free entry and exit, each firm will have zero economic profits in long- run equilibrium. 3) The long-run market equilibrium of a perfectly competitive industry is efficient: no mutually beneficial transactions go unexploited....
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern