Microeconomic Notes

Microeconomic Notes - MicroeconomicNotes 11:48:00...

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Microeconomic Notes 12/04/2011 11:48:00 Know the different graphs for Microeconomics, Macroeconomics Loss-bearing firm is always a price-taker Loss is equal to ATC   P x Qsold = In the long-run all factors of production will bedcome variable Exit criteria – in the long-run a competitive firm will exit the market  - if the   marginal cost falls below the average total cost, the firm is better off exiting the   market. IN the long-run all of the firms will achieve efficient size. IN the long term, the market will  reach equilibrium. The long-run market supply curve will be perfectly elastic End of chapter 14 Chapter 15 Monopoly 1. One seller   One Firm   Market 2. Absence of Close Substitution 3. Barriers to Entry MICROSOFT   the best example of a legal monopoly Sometimes to save infrastructure costs, the government gives a license to  only one company to provide services Natural Monopoly – the average total cost goes down with each additional   customer Monopolist’s Demand Curve is downward sloping In a monopoly the seller is a price maker because his main goal to maximize  profit. He will find the market price that will earn the maximum total revenue for him.
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TR = P x Qsold Average Revenue =  Competitive Firm – demand curve Output effect Price effect Conditions for equilbrium for a monopolist firm     To maximize profit, a monopolist firm will get equilibrium where: marginal  revenue equals marginal cost P> MC 1) MK = MC 2) P > MC 3)
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Microeconomic Notes - MicroeconomicNotes 11:48:00...

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