Econ 1201 1st Edition Lecture 10EXAM 2 MATERIALOutline of Current Lecture – Perfect CompetitionI. AssumptionsII. Short runIII. Long RunCurrent LectureI. Assumptions- No barriers to enter the market- Identical Products (can’t tell one from the other, valued equally)- Many buyers and sellers- Know all information about product-- If the implications are true than it’s a price taker*** NOTE: with perfect competition, there are zero long run profits ***II. Perfect Competition in the Short RunGOAL: maximize profitMarginal Revenue = Marginal Cost, this is when profit is maximized and there is the greatest distance between total revenue and total costThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.(Professor puts the Industry/Market graph on the left and Firm on the right)TR = entire square from q1 to p1 Total cost = square from q1 to CQ P TR MR1 5 5 52 5 10 53 5 15 54 5 20 55 5 25 5- Extra revenue (marginal) equals the price when a firm is a price taker because the price is constantII. Perfect Competition in the Long Run Firms enter the market when they see
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