曼昆微观经济学第五版课文英文版

Firms in Competitive MarketsChapter 14Copyright 2001 by Harcourt,Inc.Allrightsreserved.Requestsforpermissiontomakecopiesofanypartoftheworkshouldbemailedto:PermissionsDepartment,HarcourtCollegePublishers,6277SeaHarborDrive,Orlando,Florida32887-6777.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Meaning of CompetitionuA perfectly competitive market has the following characteristics:uThere are many buyers and sellers in the market.uThe goods offered by the various sellers are largely the same.uFirms can freely enter or exit the market.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Meaning of CompetitionuAs a result of its characteristics,the perfectly competitive market has the following outcomes:uThe actions of any single buyer or seller in the market have a negligible impact on the market price.uEach buyer and seller takes the market price as given.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Meaning of CompetitionBuyers and sellers in competitive markets are said to be price takers.Buyers and sellers must accept the price determined by the market.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Revenue of a Competitive FirmTotal revenue for a firm is the selling price times the quantity sold.TR=(P X Q)Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Revenue of a Competitive FirmTotal revenue is proportional to the amount of output.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Revenue of a Competitive FirmAverage revenue tells us how much revenue a firm receives for the typical unit sold.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Revenue of a Competitive FirmIn perfect competition,average revenue equals the price of the good.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Revenue of a Competitive FirmMarginal revenue is the change in total revenue from an additional unit sold.MR=TR/QHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Revenue of a Competitive FirmFor competitive firms,marginal revenue equals the price of the good.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Total,Average,and Marginal Revenue for a Competitive FirmHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Profit Maximization for the Competitive FirmuThe goal of a competitive firm is to maximize profit.uThis means that the firm will want to produce the quantity that maximizes the difference between total revenue and total cost.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Profit Maximization:A Numerical Example P=AR=MR P=MR1MCProfit Maximization for the Competitive Firm.Quantity0CostsandRevenueATCAVCQMAXThe firm maximizes profit by producing the quantity at which marginal cost equals marginal revenue.MC1Q1MC2Q2Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Profit Maximization for the Competitive FirmProfit maximization occurs at the quantity where marginal revenue equals marginal cost.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Profit Maximization for the Competitive FirmWhen MR MC increase QWhen MR MC decrease QWhen MR=MC Profit is maximized.The Marginal-Cost Curve and the Firms Supply Decision.Quantity0CostsandRevenueMCATCAVCCopyright2001byHarcourt,Inc.AllrightsreservedQ1 P1 P2Q2This section of the firms MC curve is also the firms supply curve.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Firms Short-Run Decision to Shut DownuA shutdown refers to a short-run decision not to produce anything during a specific period of time because of current market conditions.uExit refers to a long-run decision to leave the market.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Firms Short-Run Decision to Shut DownThe firm considers its sunk costs when deciding to exit,but ignores them when deciding whether to shut down.uSunk costs are costs that have already been committed and cannot be recovered.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Firms Short-Run Decision to Shut DownuThe firm shuts down if the revenue it gets from producing is less than the variable cost of production.Shut down if TR VCShut down if TR/Q VC/QShut down if P AVCHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Firms Short-Run Decision to Shut Down.QuantityATCAVC0CostsMCIf P AVC,keep producing in the short run.If P ATC,keep producing at a profit.Firms short-run supply curve.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Firms Short-Run Decision to Shut DownThe portion of the marginal-cost curve that lies above average variable cost is the competitive firms short-run supply curve.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Firms Long-Run Decision to Exit or Enter a MarketuIn the long-run,the firm exits if the revenue it would get from producing is less than its total cost.Exit if TR TCExit if TR/Q TC/QExit if P TCEnter if TR/Q TC/QEnter if P ATCHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Competitive Firms Long-Run Supply Curve.QuantityMC=Long-run SATCAVC0CostsFirm enters if P ATCFirm exitsif P ATCHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Competitive Firms Long-Run Supply CurveThe competitive firms long-run supply curve is the portion of its marginal-cost curve that lies above average total cost.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Competitive Firms Long-Run Supply Curve.QuantityMCATCAVC0CostsFirms long-run supply curveHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Firms Short-Run and Long-Run Supply CurvesuShort-Run Supply CurveuThe portion of its marginal cost curve that lies above average variable cost.uLong-Run Supply CurveuThe marginal cost curve above the minimum point of its average total cost curve.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.ProfitQMeasuring Profit in the Graph for the Competitive Firm.Quantity0PriceP =AR=MRATCMCPATCProfit-maximizing quantitya.A Firm with ProfitsHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.LossMeasuring Profit in the Graph for the Competitive Firm.Quantity0PriceP =AR=MRATCMCPQLoss-minimizing quantityATCb.A Firm with LossesHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Supply in a Competitive MarketMarket supply equals the sum of the quantities supplied by the individual firms in the market.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Short Run:Market Supply with a Fixed Number of FirmsuFor any given price,each firm supplies a quantity of output so that its marginal cost equals price.uThe market supply curve reflects the individual firms marginal cost curves.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Short Run:Market Supply with a Fixed Number of Firms.(a)Individual Firm SupplyQuantity(firm)0Price(b)Market SupplyQuantity(market)Price0SupplyMC1.00$2.001002001.00$2.00100,000200,000Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Long Run:Market Supply with Entry and ExituFirms will enter or exit the market until profit is driven to zero.uIn the long run,price equals the minimum of average total cost.uThe long-run market supply curve is horizontal at this price.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Long Run:Market Supply with Entry and Exit.(a)Firms Zero-Profit ConditionQuantity(firm)0Price P=minimum ATC(b)Market SupplyQuantity(market)Price0SupplyMCATCHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Long Run:Market Supply with Entry and ExituAt the end of the process of entry and exit,firms that remain must be making zero economic profit.uThe process of entry&exit ends only when price and average total cost are driven to equality.uLong-run equilibrium must have firms operating at their efficient scale.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Firms Stay in Business with Zero ProfituProfit equals total revenue minus total cost.uTotal cost includes all the opportunity costs of the firm.uIn the zero-profit equilibrium,the firms revenue compensates the owners for the time and money they expend to keep the business going.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Increase in Demand in the Short RunuAn increase in demand raises price and quantity in the short run.uFirms earn profits because price now exceeds average total cost.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Increase in Demand in the Short Run.MarketFirmQuantity(firm)0PriceMCATCP1Quantity(market)Price0D1P1Q1AS1Long-runsupply(a)Initial ConditionPHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.D2Increase in Demand in the Short Run.MarketFirmQuantity(firm)0PriceMC ATCP1Quantity(market)Price0D1P1Q1AS1Long-runsupply(b)Short-Run ResponseQ2BP2P2ProfitHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Increase in Demand in the Short Run.MarketFirmQuantity(firm)0PriceMC ATCP1Quantity(market)Price0D1P1Q1AS1Long-runsupply(c)Long-Run ResponseD2BQ2P2S2CQ3Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Why the Long-Run Supply Curve Might Slope UpwarduSome resources used in production may be available only in limited quantities.uFirms may have different costs.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Marginal FirmThe marginal firm is the firm that would exit the market if the price were any lower.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.SummaryuBecause a competitive firm is a price taker,its revenue is proportional to the amount of output it produces.uThe price of the good equals both the firms average revenue and its marginal revenue.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.SummaryuTo maximize profit a firm chooses the quantity of output such that marginal revenue equals marginal cost.uThis is also the quantity at which price equals marginal cost.uTherefore,the firms marginal cost curve is its supply curve.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.SummaryuIn the short run when a firm cannot recover its fixed costs,the firm will choose to shut down temporarily if the price of the good is less than average variable cost.uIn the long run when the firm can recover both fixed and variable costs,it will choose to exit if the price is less than average total cost.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.SummaryuIn a market with free entry and exit,profits are driven to zero in the long run and all firms produce at the efficient scale.uChanges in demand have different effects over different time horizons.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Graphical ReviewProfit Maximization for the Competitive Firm.P=AR=MR P=MR1MCQuantity0CostsandRevenueATCAVCQMAXThe firm maximizes profit by producing the quantity at which marginal cost equals marginal revenue.MC1Q1MC2Q2Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Marginal-Cost Curve and the Firms Supply Decision.Quantity0CostsandRevenueMCATCAVCQ1 P1 P2Q2This section of the firms MC curve is also the firms supply curve.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Firms Short-Run Decision to Shut Down.QuantityATCAVC0CostsMCIf P AVC,keep producing in the short run.If P ATC,keep producing at a profit.Firms short-run supply curve.Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Competitive Firms Long-Run Supply Curve.QuantityMC=Long-run SATCAVC0CostsFirm enters if P ATCFirm exitsif P ATCHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Competitive Firms Long-Run Supply Curve.QuantityMCATCAVC0CostsFirms long-run supply curveHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Measuring Profit in the Graph for the Competitive Firm.ProfitQQuantity0PriceP =AR=MRATCMCPATCProfit-maximizing quantitya.A Firm with ProfitsHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Measuring Profit in the Graph for the Competitive Firm.LossQuantity0PriceP =AR=MRATCMCPQLoss-minimizing quantityATCb.A Firm with LossesHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Short Run:Market Supply with a Fixed Number of Firms.(a)Individual Firm SupplyQuantity(firm)0Price(b)Market SupplyQuantity(market)Price0SupplyMC1.00$2.001002001.00$2.00100,000200,000Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.The Long Run:Market Supply with Entry and Exit.(a)Firms Zero-Profit ConditionQuantity(firm)0Price P=minimum ATC(b)Market SupplyQuantity(market)Price0SupplyMCATCHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Increase in Demand in the Short Run.MarketFirmQuantity(firm)0PriceMCATCP1Quantity(market)Price0D1P1Q1AS1Long-runsupply(a)Initial ConditionPHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Increase in Demand in the Short Run.D2MarketFirmQuantity(firm)0PriceMC ATCP1Quantity(market)Price0D1P1Q1AS1Long-runsupply(b)Short-Run ResponseQ2BP2P2ProfitHarcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.Increase in Demand in the Short Run.MarketFirmQuantity(firm)0PriceMC ATCP1Quantity(market)Price0D1P1Q1AS1Long-runsupply(c)Long-Run ResponseD2BQ2P2S2CQ3