{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

industsupply.23a

industsupply.23a - Econ 100A Industry Supply(Chapter 23...

Info iconThis preview shows pages 1–14. Sign up to view the full content.

View Full Document Right Arrow Icon

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

View Full Document Right Arrow Icon

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

View Full Document Right Arrow Icon

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

View Full Document Right Arrow Icon

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

View Full Document Right Arrow Icon

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

View Full Document Right Arrow Icon

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

View Full Document Right Arrow Icon

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

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

Unformatted text preview: Econ 100A: Industry Supply (Chapter 23) Thomas G. Koch Fall 2008 Thomas G. Koch Industry Supply (23A) 1(47) Clickers • Turn on your clicker • Hit a button Thomas G. Koch Industry Supply (23A) 2(47) From last time • The supply of a firm in a competitive market • But there should be many firms . . . • in an industry • Extend study to an industry of many firms Thomas G. Koch Industry Supply (23A) 3(47) Adding across firms • The supply of any firm i is S i ( p ) • Add up the supply of firms 1 , 2 , 3 ,..., i- 1 , i , i + 1 ,..., n- 1 , n • To get the final supply S ( p ) = S 1 ( p ) + S 2 ( p ) + ... + S n ( p ) = n X i =0 S i ( p ) Thomas G. Koch Industry Supply (23A) 4(47) Adding horizontally Thomas G. Koch Industry Supply (23A) 5(47) In the SR • Firms may have different SR cost curves • So some may be making positive, negative profits • Others, no profit Thomas G. Koch Industry Supply (23A) 6(47) Three firms, one price Thomas G. Koch Industry Supply (23A) 7(47) In the LR • Now, firms adjust fixed factors • Move from SR cost curves to LR cost curves • What if p < AC l ( y )? • Firm should exit Thomas G. Koch Industry Supply (23A) 8(47) Also in LR • Suppose a firm makes positive profits • Other firms should want to enter • Can they? • Is there free entry? Thomas G. Koch Industry Supply (23A) 9(47) Free entry vs. Barriers to entry • If free entry, no restrictions on production • Wheat farmer—no licensure, special technology; just seeds + land. • But cell service providers, doctors, lawyers can’t just open shop • There are barriers to entry Thomas G. Koch Industry Supply (23A) 10(47) Suppose free entry • If positive profits, others will want to enter • And they will enter • And they will change total amount offered • and its price (and profits, etc.) Thomas G. Koch Industry Supply (23A) 11(47) Suppose all firms similar • Let all firms have same LR cost function, c ( y ) • Find y * , where AC ( y ) is lowest • p * = AC ( y * ) is lowest price that supports production • p < p * = AC ( y * ) means no non-negative profits possible Thomas G. Koch Industry Supply (23A) 12(47) As there are more firms • Positive profits + free entry means . . ....
View Full Document

{[ snackBarMessage ]}

Page1 / 47

industsupply.23a - Econ 100A Industry Supply(Chapter 23...

This preview shows document pages 1 - 14. Sign up to view the full document.

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