Econ 240 1st Edition Lecture 14 Outline of Last Lecture I. Marginal Cost a. Short run average cost curve b. Long run average costII. Economies of scale III. Diseconomies of scaleOutline of Current Lecture II. Constant Returns to ScaleIII. Perfect Competitiona. Market Typesb. Perfect Competition Exsist When:c. A Firms Profit – Maximizing ChoicesCurrent LectureConstant Returns to Scale- Firm doubles its scale (all inputs), and its output exactly doubles- Average total cost does not change (ATC = TC/ Q)- Constant returns to scale occur if a firm is able to duplicate existing facilitiesPerfect CompetitionMarket Types- 4 market types are: Perfect Competition Monopoly Monopolistic Competition OligpolyPerfect Competition Exist When:- Many buyers - Many firms selling an identical product - No restrictions on entry into (or exit from) the market - No buyer or seller can influence the price everyone is a price taker A Firm's Profit – Maximizing Choices- Total Revenue (TR) the market price multiplied by the quantity sold (P x
View Full Document
Unlocking...