ECO100Y5 Chapter 15: ECO100 - Microeconomics Chapter 15 Textbook Notes
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There is free entry into and exist from the industry in the lr. Has a downward slipping demand curve and has some market power. Faces competition (the amount of product it can sell depends on the prices and products offered by other rms in the industry) In the sr, the rm looks like a monopolist; it faces a downward sloping demand curve which implies a downward-sloping mr curve) We assume every rm has un upward-sloping mc curve, but that it also faces some. Xed costs so that its atc curve is u-shaped. If a rm earns positive pro ts, new rms will enter the industry in the lr, shifting each existing rm"s demand and mr curve to the left (decreasing demand) If rms incur losses, some existing girls will exit the industry in the lr, shifting the demand and mr curve of each of the remaining rms to the right (increasing demand)
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