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# Structure for perfectly competitive markets many

• Notes
• 17

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Structure for Perfectly Competitive Markets Many firms, and Homogeneous output, and Free entry and exit, and Full and symmetric information. THINK: Apples market, Cortland variety and Jonathan’s apple orchard

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microL19-F2010-page Short Run Profit Maximization In A Perfectly Competitive Output Market Introduce some “new” notation. Jonathan’s output: q The aggregate output of the entire apple market: Q The market price for apples: P Jonathan is a “price taker”. Jonathan’s perceived demand for HIS apples (δ) will be the prevailing market price P. So… for Jonathan, δ = P = marginal revenue.
microL19-F2010-page Jonathan’s Profit Maximizing Move When P=\$528 Jonathan's Apple Farm Costs (detail) Apples (tons/year) Land Hired Labor Proprietor's time Total Cost Average Cost Marginal Cost (midpoint formula) 200 12,400 54,400 13,200 80,000 400 210 12,400 58,560 13,200 84,160 401 440 220 12,400 63,200 13,200 88,800 404 484 230 12,400 68,240 13,200 93,840 408 528 240 12,400 73,760 13,200 99,360 414 588 250 12,400 80,000 13,200 105,600 422 632 260 12,400 86,400 13,200 112,000 431

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Jonathan's Apple Farm Costs (detail) Apples (tons/year) Land Hired Labor Proprietor's time Total Cost Average Cost Marginal Cost (midpoint formula) 200 12,400 54,400 13,200 80,000 400 210 12,400 58,560 13,200 84,160 401 440 220 12,400 63,200 13,200 88,800 404 484 230 12,400 68,240 13,200 93,840 408 528 240 12,400 73,760 13,200 99,360 414 588 250 12,400 80,000 13,200 105,600 422 632 260 12,400 86,400 13,200 112,000 431

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microL19-F2010-page1 Using “The Graph” To Derive Jonathan’s Short Run Supply Curve
microL19-F2010-page1

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