ECON 200 Lecture 37: Competitive Markets Supply Curve

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erinsea-lion256

28 Nov 2016

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Economics

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ECON 200

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Byunghoon Nam

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ECON 200 Full Course Notes

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Econ 200 i lecture 37 competitive firm supply curve. All existing firms and potential entrants have identical costs. Each firm"s costs do not change as other firms enter or exit the market. The number of firms in the market is: fixed in the short run (because of fixed costs, variable in the long run (because of free entry and exit) Each firm"s short-run supply curve is its mc curve above avc: as long as p > avc, each firm will produce q where p = mc. The short-run market supply curve adds up quantity supplied by each firm at every given price. Number of firms can change because of free entry and exit in the long run. If existing firms profit (p > atc), new firms will enter: thus, the short-run market supply curve will shift right (because more firms), p falls.

Related Questions

Your firm is one of 100 identical firms operating in the short run in a perfectly competitive market. Your total cost function (short run and long run) is C = 800 + 25 q + 0.5 q2, and your marginal cost function is MC = 25 + q. The (short run and long run) market demand curve is given by Q = 2,750 â 5P. a.Find the supply curve for your firm. Show work. Then, find the short-run market supply curve. Show work. b.Find equilibrium price, P*, and quantity, Q*, in the market in the short run.Show work. c.Find the lowest price at which your firm will not exit the market in the long run.Show work. Referring to your answer in part b, should your firm exit the market in the long run if P* in the market does not increase over time?Explain. d.If you choose not to exit, how many firms (including your own) do you expect to be in the market in the long run?Show work, and explain.

lavenderotter524

Your firm is one of 100 identical firms operating in the short-run in a perfectly competitive market. Your total cost function (short-run and long-run) is C = 500 + 20 q + q², and your marginal cost function is MC = 20 + 2q. The (short-run and long-run) market demand curve is given by Q = 4,500 - 5P.

a. Find the supply curve for your firm. Then, find the short-run market supply curve. Show work.

b. Find equilibrium price, P*, and quantity, Q*, in the market in the short-run. Show work.

c. Find your firm's total revenue, total cost, and profit in the short-run. Show work.

d. Find the minimum efficient scale (MES) for your firm. Show work. Find the long-run equilibrium price in the market after entry or exit has occurred. Show work.

aquamarinecrow33

In a competitive market with identical firms:

1. free entry and exit into the market requires that firms earn zero economic profit in the long run even though they may be able to earn positive economic profit in the short run.

2. firms can earn positive economic profit in the long run if the long-run market supply curve is upward sloping.

3. an increase in demand in the short run will result in a new price above the minimum of average total cost, allowing firms to earn a positive economic profit in both the short run and the long run.

4. firms cannot earn positive economic profit in either the short run or long run.

fuchsiaraccoon523

ECON 200 Lecture 37: Competitive Markets Supply Curve

ECON 200 Full Course Notes

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