22s - 22 2010 W W Norton Company Inc Firm Supply Firm...

Info iconThis preview shows pages 1–16. Sign up to view the full content.

View Full Document Right Arrow Icon
© 2010 W. W. Norton & Company, Inc. 22 Firm Supply
Background image of page 1

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

View Full DocumentRight Arrow Icon
© 2010 W. W. Norton & Company, Inc. 2 Firm Supply How does a firm decide how much product to supply? This depends upon the firm’s technology market environment goals competitors’ behaviors
Background image of page 2
© 2010 W. W. Norton & Company, Inc. 3 Market Environments Are there many other firms, or just a few? Do other firms’ decisions affect our firm’s payoffs? Is trading anonymous, in a market? Or are trades arranged with separate buyers by middlemen?
Background image of page 3

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

View Full DocumentRight Arrow Icon
© 2010 W. W. Norton & Company, Inc. 4 Market Environments Monopoly: Just one seller that determines the quantity supplied and the market-clearing price. Oligopoly: A few firms, the decisions of each influencing the payoffs of the others.
Background image of page 4
© 2010 W. W. Norton & Company, Inc. 5 Market Environments Dominant Firm: Many firms, but one much larger than the rest. The large firm’s decisions affect the payoffs of each small firm. Decisions by any one small firm do not noticeably affect the payoffs of any other firm.
Background image of page 5

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

View Full DocumentRight Arrow Icon
© 2010 W. W. Norton & Company, Inc. 6 Market Environments Monopolistic Competition: Many firms each making a slightly different product. Each firm’s output level is small relative to the total. Pure Competition: Many firms, all making the same product. Each firm’s output level is small relative to the total.
Background image of page 6
© 2010 W. W. Norton & Company, Inc. 7 Market Environments Later chapters examine monopoly, oligopoly, and the dominant firm. This chapter explores only pure competition.
Background image of page 7

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

View Full DocumentRight Arrow Icon
© 2010 W. W. Norton & Company, Inc. 8 Pure Competition A firm in a perfectly competitive market knows it has no influence over the market price for its product. The firm is a market price-taker. The firm is free to vary its own price.
Background image of page 8
© 2010 W. W. Norton & Company, Inc. 9 Pure Competition If the firm sets its own price above the market price then the quantity demanded from the firm is zero. If the firm sets its own price below the market price then the quantity demanded from the firm is the entire market quantity-demanded.
Background image of page 9

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

View Full DocumentRight Arrow Icon
© 2010 W. W. Norton & Company, Inc. 10 Pure Competition So what is the demand curve faced by the individual firm?
Background image of page 10
© 2010 W. W. Norton & Company, Inc. 11 Pure Competition y $/output unit Market Supply p e p’ p” At a price of p” the firm faces the entire market demand. At a price of p’, zero is demanded from the firm. Market Demand
Background image of page 11

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

View Full DocumentRight Arrow Icon
© 2010 W. W. Norton & Company, Inc. 12 Pure Competition So the demand curve faced by the individual firm is . ..
Background image of page 12
© 2010 W. W. Norton & Company, Inc. 13 Pure Competition y $/output unit Market Supply p e p’ p” At a price of p” the firm faces the entire market demand. At a price of p’, zero is demanded from the firm. Market Demand
Background image of page 13

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

View Full DocumentRight Arrow Icon
© 2010 W. W. Norton & Company, Inc. 14 Pure Competition Y $/output unit p e p’ p” Market Demand
Background image of page 14
© 2010 W. W. Norton & Company, Inc.
Background image of page 15

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

View Full DocumentRight Arrow Icon
Image of page 16
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/12/2011 for the course ECON 101 taught by Professor Dee during the Spring '10 term at Andhra University.

Page1 / 68

22s - 22 2010 W W Norton Company Inc Firm Supply Firm...

This preview shows document pages 1 - 16. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online