July 7 - July 7, 2011 Notes Summer 2011 Econ 2000 II....

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July 7, 2011 Notes Summer 2011 Econ 2000 II. Substance How much to produce and what to charge in order to maximize profit is the same question that we need to answer in this unit. The only different is that we are looking at different firms. A. Perfect Competition 1. Market structure—if a firm is trying to maximize profit than it must seek to have Marginal revenue equal marginal cost. This is how you figure out what to charge. a. Many buyer and many sellers—another major point to go along with this one is that buyers and seller must be relatively small to the size of the market. i. Example: how many of us purchase gas in this parish? Almost all of us. But, how many of us buy 1000 gallons? No one does. So, if I disappear, nothing happens. Same thing with a gas station. If a gas station disappears, the price of the gas station across the street might go up but nothing will happen to the other gas prices in the parish because we are relatively small to the market. b.
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This note was uploaded on 01/16/2012 for the course ECON 2010 taught by Professor Roussel during the Spring '08 term at LSU.

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July 7 - July 7, 2011 Notes Summer 2011 Econ 2000 II....

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