firms - THEORIES OF THE FIRM Theories of the firm try to...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Intro to firms slide 1 THEORIES OF THE FIRM THEORIES OF THE FIRM Theories of the firm try to explain supply.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Intro to firms slide 2 BACKGROUND TERMS BACKGROUND TERMS Theories of the firm are organized around the different kinds of market forms in which firms can operate. In this course, the market forms are grouped this way: Perfect competition Monopoly Monopolistic competition, and Oligopoly
Background image of page 2
Intro to firms slide 3 Perfect Competition Perfect Competition A market form with these characteristics: 1) Large number of firms. 2) Homogeneous product. 3) Easy entry and exit of firms. Some economists add to this list that consumers and firms also have cheap, accurate information about prices.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Intro to firms slide 4 What the assumptions boil down to is that each firm in perfect competition is a price taker . NO FIRM HAS ANY CONTROL OVER MARKET PRICE. This means that the demand curve the firm sees for its product is infinitely elastic .
Background image of page 4
Intro to firms slide 5 Infinitely elastic demand curve of a perfectly competitive producer of soybeans in Mason, Michigan: price quantity (hundred bushels) P 0 P 0 is the current market price .
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/05/2012 for the course ECON 201 taught by Professor Brown during the Winter '12 term at BYU.

Page1 / 14

firms - THEORIES OF THE FIRM Theories of the firm try to...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online