ECON 1B03 Study Guide - Final Guide: Monopolistic Competition, Nash Equilibrium, Perfect Competition
Shanghaibalcony1234 and 37744 others unlocked
46
ECON 1B03 Full Course Notes
Verified Note
46 documents
Document Summary
Many buyers and sellers in the market. Rms freely enter and exit the market (no barriers to entry) Price takers (no one seller or buyer can in uence market behaviour) Pro t is maximized at p = mr = mc. Break-even point is where p = min atc. The rm"s supply curve is the mc curve where p is greater than or equal to min avc. A rm will shut down in the short run if p < avc. The rm"s demand curve is perfectly elastic. D = p = ar = mr. In the long run all costs are variable. A rm will exit if p < min atc. A rm will enter if p > min atc. Firms are earning zero economic pro t when p = min atc. I. e. it is horizontal to enter or exit, i. e. the long run equilibrium.