ECON 20 Lecture Notes - Lecture 14: Perfect Competition, Competitive Equilibrium, Product Differentiation
19 May 2020
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Because that"s a standard we apply in lr eq. We look at competitive model in lr eq where everything"s been capitalized. Missing the process of how it became a monopoly. If you have to grow to be better to be a monopoly than a monopoly is the result of good management. Monopoly model if you don"t pass all of it on, that"s monopoly abuse. In lr, all inputs are variable not true. The only people conceivable would be people with no fixed costs which means people not yet in the industry. The result of perfect market, all firms earn the normal rates of return. If demand drops, then we should all be earning below normal rates of return so even pc are doing better than that so must restrict entry to raise it. Hypothetically, demand could fall such it was below the normal rates of return and the market would be out of equilibrium.
