ECF2731 Lecture Notes - Lecture 5: Economic Surplus, Demand Curve, Consumer Sovereignty
26 Jul 2018
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Document Summary
Understand and recognise the various processes involved in investment decision making. Recognize and evaluate the various theories of the organisation. Market structure describes the competitive environment in terms of: R&d and innovation lead to distinctive products. Scale economies can preclude small rm size. Barriers to entry and exit can shelter incumbents from potential entrants. No barriers to entry (legal, technological, or resource) No investment lag - immediate implementation of production decisions) Prominent markets for intermediate goods and services, e. g. , discount retailing. Normal pro t is necessary to attract and maintain capital investment. Set m = mr-mc = 0 to maximize pro ts. Competitive market price (p) is shown as a horizontal line because. Firm"s marginal-cost curve shows the amount of output the rm would be willing to supply at any market price. Marginal cost schedule is the short-run supply curve so long as p >
