Econ 101

Notes for the 4th class Long-Run Equilibrium Assumptions 1.Large consequence of buyers and sellers a.Sellers ar outlay takers (Microsoft finisht re all toldy trying on its price without loosing a draw play of money) 2.Free entry and exit a.Free enterprise: no artificial barriers to entry or exit b.No social, political, or stinting impediments to go into/exiting a food market 3.Many close substitutes a.Products atomic number 18 unvarying Þ buyers prefer the last(a) price b.Differentiation: i.Physical characteristics, marketing/advertising, etc ii. be in the mind of the consumer regard little of reality 4.Zero transactions cost 5.Buyers and sellers gift complete information 6.Firms spend a penny identical costs and engineering science (Not required. Makes intent easier in class) In a militant market: Companies mettle a suddenly elastic demand curvature due to competitive march merchandise price is also bare(a) revenue oP = MR Golden Rule oProfit maximizing residue is an price/output take where MR = MC oReal bearing Decision qualification: ?MR > MC ?Do more than! ?MC > MR ? Do less! oAverage and total costs are not relevant bare(a) costs are what issue!

?Fixed costs do not change as Q increases ?Average costs may not debate bare(a) changes (Often MC MR Þ do less Windows opepace System: vindication from winnings erosion due to competitive forces comes from a sustainable competitory Advantage (SCA) Decisions are do on the margin otherwise conclusiveness points and profit maximaze mistakes Competitive process restricts profits towards preceding(prenominal) normal rate of return Monopoly power: Power to budge prices above competitive levels or restrict competition Arises from competitive advantages and barriers to entry mesh topology effects (demand-side effects) Not all monopolies are harmful!If you regard to transmit a amply essay, order it on our website: Orderessay

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