Ch 9

• Perfect Competition

Characteristics

• Fragmented

• Undifferentiated products

• Perfect information about prices

• equal Access to resources

Implications

• Price taker

• Law of one price

• Zero-profit in the long run

Economic Profit

• Economic profit vs account profit

FIGURE 9-1 Profit Maximization by a Price-Taking Firm

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-01

(Figure continues on next slide)

FIGURE 9-1 (Continued)

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-01 continued

Costs

0,

0),()(

QWHENSFC

QWHENQTVCNSFCSFCQSTC

Supply curve

QNSFCQAVCPQAR

QQTVCNSFCQTRIFQ

QNSFCQAVCANSCPQAR

QTNSCQTVCNSFCQTRIFQ且QMCQMRP

/)()(

0:),()(,0

/)()(

)()()(,0

)()(

When fixed costs are all sunk

)()(

0:),()(,0

)()(

)()()(,0

)()(

QAVCPQAR

QQTVCQTRIFQ

QAVCPQAR

QTVCQTVCNSFCQTRIFQ且QMCQMRP

FIGURE 9-2 Short-Run Supply Curve for a Price-Taking Firm

Whose fixed costs are all sunk : P=0.05 q=25, loss=TFC+(avc25-P)25 ;q=0,;loss=TFC

FIGURE 9-3 Short-Run Supply Curve for a Firm withNonsunk Fixed Costs

P=0.15,q=35, 則 loss=TFC+35(ansc35-0.15)q=0,loss=TFC

FIGURE 9-4 Supply Curve for Learning-By-Doing Exercise 9.2

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-04

FIGURE 9-5 Supply Curve for a U.S. Corn Farmer

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-05

SHORT-TUN MARKET SUPPLY CURVE

FIGURE 9-6 Short-Run Market Supply Curve

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-06

FIGURE 9-7 Supply Curves for Copper in 2000

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-07

FIGURE 9-8 Perfectly Inelastic and Perfectly Elastic Supply Curves

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-08

FIGURE 9-9 Short-Run Equilibrium

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-09

Comparative Static

FIGURE 9-10 Comparative Statics Analysis: Increase in the Number of Firms

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-10

FIGURE 9-11 The Impact of a Shift in Demand on Price Depends on the Price Elasticity of Supply

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-11

FIGURE 9-12 The Short-Run Supply Curve for Roses

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-12

FIGURE 9-13 The Price of Electricity in the Nord Pool, 1999

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-13

Long-run output and plant-size adjustments

FIGURE 9-14 Long-Run Output and Plant Size Adjustment by a Price-Taking Firm

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-14

FIGURE 9-15 The Firm’s Long-Run Supply Curve

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-15

Free entry and long-run equilibrium

FIGURE 9-16 Long-Run Equilibrium in a PerfectlyCompetitive Market

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-16

FIGURE 9-17 Relationship Between Number of Internet Service Providers and the Size of the Market in 1998

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-17

Long-run market supply curves

• Input prices changes

FIGURE 9-18 Long-Run Industry Supply Curve

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-18

FIGURE 9-19 Spot Price to Charter a Supertanker, January1973-March 1976

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-19

FIGURE 9-20 The Collapse of the Oil Tanker Market, 1973–1975

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-20

FIGURE 9-21 Long-Run Industry Supply Curve in anIncreasing-Cost Industry

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-21

FIGURE 9-22 Economic Rent

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-22

FIGURE 9-23 Producer Surplus for a Price-Taking Firm

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-23

FIGURE 9-24 Market-Level Producer Surplus: Number of Firmsin the Industry is Fixed

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-24

FIGURE 9-25 Producer Surplus in the World Copper Market

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-25

FIGURE 9-26 Producer Surplus at the Long-Run Equilibrium in an Increasing-Cost Industry

Besanko & Braeutigam/Microeconomics: An Integrated ApproachChapter 9, Figure 09-26