20-lreq pc jpw - PREVIEW Long Run Equilibrium In Perfect...

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microL20-F2010-page http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ PREVIEW Long Run Equilibrium In Perfect Competition Lecture 20 Dr. Jennifer P. Wissink ©2009 John M. Abowd and Jennifer P. Wissink, all rights reserved. November 4, 2010
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microL20-F2010-page http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ SO: The Market & The Firm In Short Run Equilibrium
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microL20-F2010-page http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ Market Net Social Surplus Demand=MB Short Run Supply=MC P Quantity P* Q* The market equilibrium occurs Consumers’ surplus is the blue shaded area Producers’ surplus is the red shaded area Net social surplus is the blue and red shaded area
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microL20-F2010-page http://www.arts.cornell.edu/econ/wissink/econ1110jpw/ First, we are going to examine the long run cost curves of a single business. Next, we will make precise the relation between the firm’s short run and long run supply decisions. Then, we will consider the market in long run equilibrium. So: Consider the following… q = f(K, L) where q is firm output, K is firm capital and L is firm labor and where P K is the unit price of capital and P L is the unit price of labor.
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20-lreq pc jpw - PREVIEW Long Run Equilibrium In Perfect...

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