12. Pure Competition y $/output unit Market Supply p e p’ At a price of p’, zero is demanded from the firm. Market Demand
13. Pure Competition y $/output unit Market Supply p e p’ p” At a price of p” the firm faces the entire market demand. At a price of p’, zero is demanded from the firm. Market Demand
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15. Pure Competition y $/output unit Market Supply p e p’ p” At a price of p” the firm faces the entire market demand. At a price of p’, zero is demanded from the firm. Market Demand
18. Smallness $/output unit y Firm’s MC The individual firm’s technology causes it always to supply only a small part of the total quantity demanded at the market price. Firm’s demand curve p e
22. The Firm’s Short-Run Supply Decision What can the solution y s * look like? (a) y s * > 0: (y) y y s *
23. The Firm’s Short-Run Supply Decision What can the solution y* look like? (b) y s * = 0: (y) y y s * = 0
24. The Firm’s Short-Run Supply Decision For the interior case of y s * > 0, the first- order maximum profit condition is That is, So at a profit maximum with y s * > 0, the market price p equals the marginal cost of production at y = y s *.
25. The Firm’s Short-Run Supply Decision For the interior case of y s * > 0, the second- order maximum profit condition is That is, So at a profit maximum with y s * > 0, the firm’s MC curve must be upward-sloping.
27. The Firm’s Short-Run Supply Decision $/output unit y p e y s * y’ At y = y s *, p = MC and MC slopes upwards. y = y s * is profit-maximizing. MC s (y)
28. The Firm’s Short-Run Supply Decision $/output unit y p e y s * y’ At y = y s *, p = MC and MC slopes upwards. y = y s * is profit-maximizing. At y = y’, p = MC and MC slopes downwards. y = y’ is profit-minimizing. MC s (y)
29. The Firm’s Short-Run Supply Decision $/output unit y p e y’ At y = y s *, p = MC and MC slopes upwards. y = y s * is profit-maximizing. So a profit-max. supply level can lie only on the upwards sloping part of the firm’s MC curve. MC s (y) y s *
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34. The Firm’s Short-Run Supply Decision AVC s (y) AC s (y) MC s (y) $/output unit y
35. The Firm’s Short-Run Supply Decision AVC s (y) AC s (y) MC s (y) $/output unit y
36. The Firm’s Short-Run Supply Decision AVC s (y) AC s (y) MC s (y) $/output unit y p AVC s (y)
37. The Firm’s Short-Run Supply Decision AVC s (y) AC s (y) MC s (y) p AVC s (y) y s * > 0. $/output unit y
38. The Firm’s Short-Run Supply Decision AVC s (y) AC s (y) MC s (y) p AVC s (y) y s * = 0. $/output unit y p AVC s (y) y s * > 0.
39. The Firm’s Short-Run Supply Decision AVC s (y) AC s (y) MC s (y) p AVC s (y) y s * = 0. The firm’s short-run supply curve $/output unit y p AVC s (y) y s * > 0.
40. The Firm’s Short-Run Supply Decision AVC s (y) AC s (y) MC s (y) The firm’s short-run supply curve Shutdown point $/output unit y
49. The Firm’s Long-Run Supply Decision MC(y) AC(y) y $/output unit The firm’s long-run supply curve
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51. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit AC s (y) MC s (y)
52. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit AC s (y) MC s (y) p’ y s * y* y s * is profit-maximizing in this short-run.
53. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit AC s (y) MC s (y) p’ y s * y* y s * is profit-maximizing in this short-run. s
54. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit AC s (y) MC s (y) p’ y s * y* The firm can increase profit by increasing x 2 and producing y* output units. s
55. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit AC s (y) MC s (y) p” y s * y s * is loss-minimizing in this short-run.
56. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit AC s (y) MC s (y) p” y s * y s * is loss-minimizing in this short-run. Loss
57. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit AC s (y) MC s (y) p” y s * This loss can be eliminated in the long- run by the firm exiting the industry. Loss
58. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit
59. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit p’ y s * y s * is profit-maximizing in this short-run.
60. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit p’ y s * y s * is profit-maximizing in this short-run. s
61. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit p’ y s * y s * is profit-maximizing in this short-run. y* is profit-maximizing in the long-run. y*
62. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit p’ y s * y s * is profit-maximizing in this short-run. y* is profit-maximizing in the long-run. y*
63. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit p’ y s * y* s The firm can increase profit by reducing x 2 and producing y* units of output.
64. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit
65. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit
66. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit
67. The Firm’s Long & Short-Run Supply Decisions MC(y) AC(y) y $/output unit Short-run supply curves Long-run supply curve