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lec24 - Equilibrium with free entry and exit MC AC REVIEW P...

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1 REVIEW MICROECONOMICS MACROECONOMICS 4 COMPETITION Free entry and exit: P = AC Firm cannot affect market price: P = MC 5 P = AC = MC implies P = minAC p* Q AC MC 6 Equilibrium with free entry and exit: P** q** MC AC D Firm Market Q** 9 MONOPOLISTIC COMPETITION Free entry and exit: P = AC Firms’ output decisions affect prices: P > MC 10 P = AC > MC implies P > minAC p Q AC MC
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