Lecture_18_Firm_Supply - Lecture 18: Firm Supply c 2008...

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Lecture 18: Firm Supply c 2008 Je/rey A. Miron Outline 1. Introduction 2. The Market Environment 3. Pure Competition 4. The Supply Decision of a Competitive Firm 5. Two Exceptions 7. The Long-Run Supply Curve of a Firm 7. Constant Long-Run Average Costs 1 Introduction This is a step amount of output at the lowest cost. makes for a given set of output prices and input prices. Now we want to characterize the relation between the output price and the amount produced. We will, for the most part, suppress input prices. We start by describing 1
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In The technological constraints are summarized by the production function and the cost function (these two are related, but the cost function contains additional information in the form of input prices). The fact that additional output re- quires additional costs does not per se arbitrarily, but it suggests that it must balance the costs against possible additional revenue. price p , it will only sell an amount x . We call the relationship between the price a . curve. the market demand curve. expectations, and so on. So, things can get messy fast. We will address some of the more complicated market environments later. We start, however, with the simplest possible market environment: pure compe- tition. 3 Pure Competition price is independent of its own level of output. 2
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This note was uploaded on 09/16/2009 for the course ECONOMICS 1010A taught by Professor Jeffreya.miron during the Fall '09 term at Harvard.

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Lecture_18_Firm_Supply - Lecture 18: Firm Supply c 2008...

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