Econ 1011 - Lecture 13

Econ 1011 - Lecture 13 - :Part1 R&TChapter8&11.3 1...

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Lectures 13 – Perfectly Competitive Markets: Part 1 R&T Chapter 8 & 11.3 1) Quick Review (Models so Far) a. Map Model … to show how models work b. Pure Exchange model (apples and oranges) c. Ricardian model with production and trade (Comparative advantage) d. Demand model (many consumers; one good; determinants) e. Production Model (Cost curves) f. Monopoly (one firm; many consumers) g. Duopoly (two firms; many consumers) h. Perfect competition (many firms; many consumers) 2) Market Structure a. Firms behave differently, and profit maximization works differently, based on the extent of competition with other firms selling substitutable products. i. Only one firm – Monopoly ii. Several firms – Oligopoly iii. Many, many firms – Perfect Competition 3) Assumptions in Perfect Competition (PC) a. Many, many profit maximizing firms b. each firm producing the same product. (the good is homogenous or perfectly substitutable) c. Many many potential buyers of the product d. Perfect info – knows the price, knows its cost curves, etc.
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Econ 1011 - Lecture 13 - :Part1 R&TChapter8&11.3 1...

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