L18 - Road map 1) Consumers choice 2) Equilibrium,...

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1 L18 Supply function, Entry and market structure Road map 1) Consumers choice 2) Equilibrium, Producers (Pareto efficiency) 3) Market Failures - supply, free entry, market structure (IO) - monopoly and oligopoly (IO) - externalities - public goods - asymmetric information Producers ± Producers: ± Maximize profit - cost minimization (engineers) (IRS, CRS, DRS) - level of production (managers) today (,) yf K L = () Cy y Today ± Technology for free? Typically fixed costs F ± F does not depend on the level of y ± Optimal supply y ± Partial equilibrium model (one industry) - Equilibrium price given N firms - Free entry: number of firms () 1 2 D pp =
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2 Cost Curves ± We add Fixed Cost F (does not depend on y) ±
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This note was uploaded on 06/04/2011 for the course ECON 301 taught by Professor Hansen during the Spring '08 term at Wisconsin.

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L18 - Road map 1) Consumers choice 2) Equilibrium,...

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