note2 - ch10 - Econ 251 Fall 2009 Handout 17 Chapter 10...

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Econ 251 Fall 2009 Handout 17 10/22/09 1 Chapter 10 – Perfect Competition Perfect Competition and Long-run Equilibrium: In the short run: profits can be ________________________________ In the long run: A closer look at entry : Consider short run equilibrium where _________________________________________ Graphically:
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Econ 251 Fall 2009 Handout 17 10/22/09 2 A closer look at exit: Consider short run equilibrium where _________________________________________ Graphically: Adjustment to a new long-run equilibrium Case 1. “Constant Cost” Industry = __________________________________________________ Example : Start with a market that is initially in a long-run equilibrium, P*=MC=ATC. Then assume demand increases . How do we reach the long run equilibrium?
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Handout 17 10/22/09 3 Graph: Case 2. “Increasing Cost” Industry = ________________________________________________________ Example : Start with a market that is initially in a long-run equilibrium, P*=MC=ATC. Then assume
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note2 - ch10 - Econ 251 Fall 2009 Handout 17 Chapter 10...

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