中微课件范里安版 Micro Ch22.ppt

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1、ChapterTwenty-TwoFirmSupplyThepurposeofthischapterWestudyhowmuchafirmdecidestosupply?Notethedifferencesbetweenaconsumerandafirm:Aconsumerispassive,takingpricesasgiven;Afirmhasmuchmorechoices[entry,exit,price-setting(insomecases)]DifferenttypesoffirmsMonopoly:Justonesellerthatde

2、terminesthequantitysuppliedandthemarket-clearingprice.Oligopoly:Afewfirms,thedecisionsofeachinfluencingthepayoffsoftheothers.MarketEnvironmentsDominantFirm:Manyfirms,butonemuchlargerthantherest.Thelargefirm’sdecisionsaffectthepayoffsofeachsmallfirm.Decisionsbyanyonesmallfirmdon

3、otnoticeablyaffectthepayoffsofanyotherfirm.MarketEnvironmentsMonopolisticCompetition:Manyfirmseachmakingaslightlydifferentproduct.Eachfirm’soutputlevelissmallrelativetothetotal.PureCompetition(thefocusofthischapter):Manyfirms,allmakingthesameproduct.Eachfirm’soutputlevelissmall

4、relativetothetotal.PureCompetitionAfirminaperfectlycompetitivemarketknowsithasnoinfluenceoverthemarketpriceforitsproduct.Thefirmisamarketprice-taker.Sowhatisthedemandcurvefacedbytheindividualfirm?PureCompetitionY$/outputunitMarketSupplyMarketDemandpePureCompetitiony$/outputunit

5、MarketSupplypep’p”Atapriceofp”thefirmfacestheentiremarketdemand.Atapriceofp’,zeroisdemandedfromthefirm.MarketDemandPureCompetitionY$/outputunitpep’p”MarketDemandWhatdoesitmeantosaythatanindividualfirmis“small”$/outputunityFirm’sMCTheindividualfirm’stechnologycausesitalwaystosu

6、pplyonlyasmallpartofthetotalquantitydemandedatthemarketprice.Firm’sdemandcurvepeTheFirm’sShort-RunSupplyDecisionCase(a)ys*>0:P(y)yys*TheFirm’sShort-RunSupplyDecisionCase(b)ys*=0:P(y)yys*=0TheShort-runSupplyCurveofCase(a)$/outputunitypey’p=MCandMCslopesupwards.MCs(y)ys*TheShort

7、-runSupplyofCase(b)Ifthiscase,pisverylow,suchthatp0.Notethiscase,theprofitis–F.Whenwill(a)or(b)happen?Sincey=0isalwaysafeasiblechoice,iftheoptimaly>0,itmustbeI.e.,Equivalently,TheFirm’sShort-RunSupplyDecisionAVCs(y)ACs(y)MCs(y)p

8、rm’sshort-runsupplycurve$/outputunityp>AVCs(y)ys*>0.T