chapter 6 perfect comp Flashcards

1
Q

what are the main characteristics of perfect Competition

A
  1. price taking–> horizontal demand curve
  2. large number of buyers and sellers–> horizontal demand curve
  3. homogenous products–> horuznatl demand curve
  4. free entry and exit–> long run eq
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2
Q

what are the three cases on whether a firm should shut down or continue producing

A
  1. p> ATC at q–>positive profit
  2. AVC< P< ATC–> is making a loss but still prpduces
  3. p< AVC–> firm shuts down
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3
Q

what is the profit formula in the short run

A

(p-atc)q

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4
Q

short run supply curve

A

comes from mc

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5
Q

firms producer surplus in the short run?

A

aka psi so tr-tvc

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6
Q

direct market supply function

A

once u get it from mc, times it by the number of firms

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7
Q

zero output

A

min avc= mc

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8
Q

zero profit

A

min atc=mc

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