经济学原理英文版第十四章PPT

perfectly competitive markets.
CHAPTER 14
FIRMS IN COMPETITIVE MARKETS
1
Characteristics of Perfect Competition
1. Many buyers and many sellers
2. The goods offered for sale are largely the same.
FIRMS IN COMPETITIVE MARKETS
12
A Competitive Firm’s SR Supply Curve
The firm’s SR Costs supply curve is the portion of its MC curve If P > AVC, then above AVC. firm produces Q where P = MC.
If MR > MC, then increase Q to raise profit.
If MR < MC, then reduce Q to raise profit.
CHAPTER 14
FIRMS IN COMPETITIVE MARKETS
7
Profit Maximization
(continued from earlier exercise) At any Q with MR > MC, increasing Q raises profit. At any Q with MR < MC, reducing Q raises profit.
5
$10
$50
4
ACTIVE LEARNING
Answers
Q 0 1 2 3 4
1:
∆TR ∆Q
Fill in the empty spaces of the table.
P $10 $10 $10 $10 $10 TR = P x Q $0 $10 AR = TR Q MR =
n.a.
$10
$10 $10 $10
14
Firms in Competitive Markets
PRINCIPLES OF
MICROECONOMICS
FOURTH EDITION
N. G R E G O R Y M A N K I W
PowerPoint® Slides by Ron Cronovich
© 2007 Thomson South-Western, all rights reserved
CHAPTER 14
Q 0
TR $0
TC $5
Profit MR MC
Profit =
MR – MC
$6 4 2
–$5
$10 $4 1 10 5 10 7 8 6
1 2 3
4 5
10 20 30
40 50
9 15 23
33 45
10 7 10
5
10 12
0 –2
FIRMS IN COMPETITIVE MARKETS
The MC curve determines the firm’s Q at any price. Hence, the MC curve is the firm’s supply curve. Q1
CHAPTER 14 FIRMS IN COMPETITIVE MARKETS
Costs
MC P2 MR2
Notice that $20 $10 MR = P
$30 $40 $10 $10
$10
$10
5
பைடு நூலகம்$10
$50
$10
5
MR = P for a Competitive Firm
A competitive firm can keep increasing its output
without affecting the market price.
2
The Revenue of a Competitive Firm
Total revenue (TR) Average revenue (AR) Marginal Revenue (MR):
The change in TR from selling one more unit.
TR = P x Q
decision as: Exit if P < ATC
CHAPTER 14
FIRMS IN COMPETITIVE MARKETS
16
A New Firm’s Decision to Enter the Market
In the long run, a new firm will enter the market if
If P < AVC, then firm shuts down (produces Q = 0).
CHAPTER 14 FIRMS IN COMPETITIVE MARKETS
MC ATC AVC
Q
13
The Irrelevance of Sunk Costs
Sunk cost: a cost that has already been
So, each one-unit increase in Q causes revenue
to rise by P, i.e., MR = P. MR = P is only true for firms in competitive markets.
CHAPTER 14
FIRMS IN COMPETITIVE MARKETS
Should you have the transmission repaired? Don’t consider $1000 when you make decisions. It is a sunk cost.
CHAPTER 14 FIRMS IN COMPETITIVE MARKETS
15
A Firm’s Long-Run Decision to Exit
Costs
MC
MR
Changing Q would lower profit.
CHAPTER 14
Qa Q 1 Qb
Q
9
FIRMS IN COMPETITIVE MARKETS
MC and the Firm’s Supply Decision
If price rises to P2, then the profitmaximizing quantity rises to Q2.
CHAPTER 14
FIRMS IN COMPETITIVE MARKETS
11
A Firm’s Short-Run Decision to Shut Down
If firm shuts down temporarily,
• revenue falls by TR • costs fall by VC
What factors should affect these decisions?
• Your costs (studied in preceding chapter) • How much competition you face
We begin by studying the behavior of firms in
3. Firms can freely enter or exit the market.
Because of 1 & 2, each buyer and seller is a
“price taker” – takes the price as given.
CHAPTER 14
FIRMS IN COMPETITIVE MARKETS
committed and cannot be recovered
Sunk costs should be irrelevant to decisions;
you must pay them regardless of your choice.
FC is a sunk cost: The firm must pay its fixed
6
Profit Maximization
What Q maximizes the firm’s profit? To find the answer,
“Think at the margin.” If increase Q by one unit, revenue rises by MR, cost rises by MC.
P1
MR
Q2
Q
10
Shutdown vs. Exit
Shutdown:
A short-run decision not to produce anything because of market conditions.
Exit:
A long-run decision to leave the market.
it is profitable to do so: if TR > TC.
Divide both sides by Q to express the firm’s
entry decision as: Enter if P > ATC
costs whether it produces or shuts down.
So, FC should not matter in the decision to shut
down.
CHAPTER 14
FIRMS IN COMPETITIVE MARKETS
14
You are selling your 1996 Mustang. You have already spent $1000 on repairs.
Introduction: A Scenario
Three years after graduating, you run your own
business.
You have to decide how much to produce, what
price to charge, how many workers to hire, etc.
At the last minute, the transmission dies. You can pay $600 to have it repaired, or sell the car “as is.” Blue book value is $6500 if transmission works, $5700 if it doesn’t.
If firm exits the market,
• revenue falls by TR • costs fall by TC
So, the firm should exit if TR < TC. Divide both sides by Q to rewrite the firm’s
TR =P AR = Q ∆TR MR = ∆Q
CHAPTER 14
FIRMS IN COMPETITIVE MARKETS
3
ACTIVE LEARNING
Exercise
Q 0 1 2 3 4
1:
Fill in the empty spaces of the table.
P $10 $10 $10 $10 $10 $40 $10 TR AR n.a. $10 MR
A firm that shuts down temporarily must still pay
its fixed costs. A firm that exits the market does not have to pay any costs at all, fixed or variable.
So, the firm should shut down if TR < VC. Divide both sides by Q: TR/Q < VC/Q So we can write the firm’s decision as:
Shut down if P < AVC
CHAPTER 14
8
MC and the Firm’s Supply Decision
Rule: MR = MC at the profit-maximizing Q. At Qa, MC < MR. So, increase Q to raise profit. At Qb, MC > MR. So, reduce Q to raise profit. At Q1, MC = MR. P1