ch22lec - Chapter 22 Firm Supply By Rust, Cho, Juan Firm...

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Chapter 22 Firm Supply By Rust, Cho, Juan
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Firm Supply and Market Environments Firm Supply •H o w d o e s a f i r m d e c i d e how much product to supply? This depends upon the firm’s –t e c h n o l o g y –m a r k e t e n v i r o n m e n t –g o a l s –c o m p e t i t o r s b e h a v i o r s Market Environments •A r e t h e r e m a n y o t h e r firms, or just a few? •D o o t h e r f i r m s d e c i s i o n s affect our firm’s payoffs? •I s t r a d i n g a n o n y m o u s , i n a market? Or are trades arranged with separate buyers by middlemen?
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Market Environments •M o n o p o l y : J u s t o n e s e l l e r t h a t determines the quantity supplied and the market-clearing price. Oligopoly: A few firms, the decisions of each influencing the payoffs of the others. •D o m i n a n t F i r m : M a n y f i r m s , b u t one much larger than the rest. The large firm’s decisions affect the payoffs of each small firm. Decisions by any one small firm do not noticeably affect the payoffs of any other firm. o n o p o l i s t i c C o m p e t i t i o n : M a n y firms each making a slightly different product. Each firm’s output level is small relative to the total. •P u r e C o m p e t i t i o n : M a n y f i r m s , all making the same product. Each firm’s output level is small relative to the total. •L a t e r c h a p t e r s e x a m i n e m o n o p o l y , oligopoly, and the dominant firm. •T h i s c h a p t e r e x p l o r e s o n l y p u r e c o m p e t i t i o n .
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Pure Competition • A firm in a perfectly competitive market knows it has no influence over the market price for its product. The firm is a market price-taker.
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ch22lec - Chapter 22 Firm Supply By Rust, Cho, Juan Firm...

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