This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: More of societys resources flowed into the economy. The key to understanding when new firms will want to come into an industry, or existing firms leave, lies in role of profits; remember these ARE economic profits. Because economic profits are the difference between revenue and opportunity cost, the existence of profit means a firm is earning ANGEL. Zero Economic Profit is not always bad! Pay yourself is always included in the economic profit. LONG RUN PERFECT COMPETITION ECONOMIC PERFORMANCE 1. Economic Profit = 0 2. Casts at Minimum a. Efficient Scale of the Firm 3. Price = Marginal Cost a. Economic welfare maximized MONOPOLY Definition: One firm in the industry BASES FOR A MONOPOLY 1. Monopoly on resources 2. Government Created a. Patent20 years b. Franchise 3. Natural Monopoly a. When single firm can produce cheaper than many...
View Full Document
This note was uploaded on 10/13/2011 for the course EC 201 taught by Professor Haider during the Spring '10 term at Michigan State University.
- Spring '10
- Perfect Competition