电子科技大学：经济学原理（PPT课件讲稿）Principles of Economics

Principles of Economics Session 6

Principles of Economics Session 6

Topics To Be Covered ◆ Market structure Characteristics of Perfectly Competitive Market Profit Maximization for a Competitive Firm Zero-Profit point and shut-Down point Short-Run Supply curve ◆ Long-Run Supply Curve ◆ Producer Surplus Pricing Information

Topics To Be Covered Market Structure Characteristics of Perfectly Competitive Market Profit Maximization for a Competitive Firm Zero-Profit Point and Shut-Down Point Short-Run Supply Curve Long-Run Supply Curve Producer Surplus Pricing Information

Market structure ◆ Perfect Competition ◆ Monopoly ◆ Oligopoly Monopolistic Competition

Market Structure Perfect Competition Monopoly Oligopoly Monopolistic Competition

Characteristics of Perfectly Competitive Market Many buyers and sellers ◆ Product homogeneity ◆ Free entry and exit ◆ Price taking

Characteristics of Perfectly Competitive Market Many buyers and sellers Product homogeneity Free entry and exit Price taking

Product Homogeneity The products of all firms are perfect substitutes Y Examples: Agricultural products, oil, copper, iron, lumber

Product Homogeneity The products of all firms are perfect substitutes. Examples: Agricultural products, oil, copper, iron, lumber

Free Entry and Exit Buvers can easily switch from one supplier to another. Suppliers can easily enter or exit a market

Free Entry and Exit Buyers can easily switch from one supplier to another. Suppliers can easily enter or exit a market

Price Taking The individual firm sells a very small share of the total market output and, therefore, cannot influence market price o The individual consumer buys too small a share of industry output to have any impact on market price. Buyers and sellers in competitive markets are said to be price takers, for they must accept the price determined by the market

Price Taking The individual firm sells a very small share of the total market output and, therefore, cannot influence market price. The individual consumer buys too small a share of industry output to have any impact on market price. Buyers and sellers in competitive markets are said to be price takers, for they must accept the price determined by the market

Demand Faced by a competitive Firm Industry Firm $4 Q

Demand Faced by a Competitive Firm Q P $4 d Industry Firm D $4 P Q

Price Elasticity of Demand P Individual producer sells all units for $4 regardless of the producer's level of output, so price under $4 is irrational. If the roducer tries to raise price, sales are zero The price elasticity of demand for products of a single firm IS

Individual producer sells all units for $4 regardless of the producer’s level of output, so price under $4 is irrational. If the producer tries to raise price, sales are zero. The price elasticity of demand for products of a single firm is Price Elasticity of Demand E=∞

Revenue of a Perfectly Competitive Firm Total revenue for a firm is the selling price times the quantity sold. TR=PXO

Revenue of a Perfectly Competitive Firm Total revenue for a firm is the selling price times the quantity sold. TR=P×Q