CH-14 PPT - Chapter14 Firms in Competitive Markets...

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Firms in Competitive Markets  Chapter 14 M icroeconomics P R I N C I P L E S   O F P R I N C I P L E S   O F N. Gregory Mankiw N. Gregory Mankiw
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Competitive markets (Chapter 14) Monopoly (Chapter 15) Monopolistic competition (Chapter 16) Oligopoly (Chapter 17)
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Many buyers and sellers Goods offered by the various sellers are largely the same Firms can freely enter or exit the market
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Firms in perfect competition are price takers. A price taker is a firm that cannot influence the market price because its production is an insignificant part of the total market.
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A firm is a price taker if it faces a perfectly elastic demand for its product.
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$ Market Q D M S M $5 $5 Firm Q $ D F
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Marginal Revenue Marginal revenue is the change in total revenue from an additional unit sold. Economists use the term marginal changes to describe small incremental adjustments to an existing plan of action. For firms in perfect competition , marginal revenue is equal to price.
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Q FC VC TC 0 35 0 35 1 35 24 59 2 35 40 75 3 35 60 95 4 35 85 120 5 35 115 150 6 35 155 190 7 35 210 240
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Q FC VC TC TR Profit 0 35 0 35 0 -35 1 35 24 59 40 -19 2
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This note was uploaded on 09/25/2011 for the course BMGT 220 taught by Professor Bulmash during the Spring '08 term at Maryland.

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CH-14 PPT - Chapter14 Firms in Competitive Markets...

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