微观经济学-曼昆英文版本

13 FirmsinCompetitiveMarkets Inthischapter lookfortheanswerstothesequestions Whatisaperfectlycompetitivemarket Whatismarginalrevenue Howisitrelatedtototalandaveragerevenue Howdoesacompetitivefirmdeterminethequantitythatmaximizesprofits Whenmightacompetitivefirmshutdownintheshortrun Exitthemarketinthelongrun Whatdoesthemarketsupplycurvelooklikeintheshortrun Inthelongrun Introduction AScenario Threeyearsaftergraduating yourunyourownbusiness Youmustdecidehowmuchtoproduce whatpricetocharge howmanyworkerstohire etc Whatfactorsshouldaffectthesedecisions Yourcosts studiedinprecedingchapter HowmuchcompetitionyoufaceWebeginbystudyingthebehavioroffirmsinperfectlycompetitivemarkets 0 CharacteristicsofPerfectCompetition 1 Manybuyersandmanysellers 2 Thegoodsofferedforsalearelargelythesame 3 Firmscanfreelyenterorexitthemarket Becauseof1 2 eachbuyerandsellerisa pricetaker takesthepriceasgiven 0 TheRevenueofaCompetitiveFirm Totalrevenue TR Averagerevenue AR Marginalrevenue MR ThechangeinTRfromsellingonemoreunit TR PxQ 0 ACTIVELEARNING1CalculatingTR AR MR Fillintheemptyspacesofthetable 50 10 5 40 10 4 10 3 10 2 10 10 1 n a 10 0 TR P Q MR AR 10 ACTIVELEARNING1Answers Fillintheemptyspacesofthetable 50 10 5 40 10 4 10 3 10 2 10 10 1 n a 10 0 TR PxQ P Q 10 MR PforaCompetitiveFirm Acompetitivefirmcankeepincreasingitsoutputwithoutaffectingthemarketprice So eachone unitincreaseinQcausesrevenuetorisebyP i e MR P MR Pisonlytrueforfirmsincompetitivemarkets 0 ProfitMaximization WhatQmaximizesthefirm sprofit Tofindtheanswer thinkatthemargin IfincreaseQbyoneunit revenuerisesbyMR costrisesbyMC IfMR MC thenincreaseQtoraiseprofit IfMR MC thenreduceQtoraiseprofit 0 ProfitMaximization 50 5 40 4 30 3 20 2 10 1 0 0 Profit MR MC MC MR Profit TC TR Q AtanyQwithMR MC increasingQraisesprofit 10 10 10 10 10 continuedfromearlierexercise AtanyQwithMR MC reducingQraisesprofit 0 MCandtheFirm sSupplyDecision AtQa MCMR So reduceQtoraiseprofit AtQ1 MC MR ChangingQwouldlowerprofit Rule MR MCattheprofit maximizingQ 0 MCandtheFirm sSupplyDecision IfpricerisestoP2 thentheprofit maximizingquantityrisestoQ2 TheMCcurvedeterminesthefirm sQatanyprice Hence Q Costs theMCcurveisthefirm ssupplycurve 0 Shutdownvs Exit Shutdown Ashort rundecisionnottoproduceanythingbecauseofmarketconditions Exit Along rundecisiontoleavethemarket Akeydifference IfshutdowninSR muststillpayFC IfexitinLR zerocosts 0 AFirm sShort runDecisiontoShutDown Costofshuttingdown revenueloss TRBenefitofshuttingdown costsavings VC firmmuststillpayFC So shutdownifTR VCDividebothsidesbyQ TR Q VC QSo firm sdecisionruleis ShutdownifP AVC 0 Thefirm sSRsupplycurveistheportionofitsMCcurveaboveAVC ACompetitiveFirm sSRSupplyCurve 0 TheIrrelevanceofSunkCosts Sunkcost acostthathasalreadybeencommittedandcannotberecoveredSunkcostsshouldbeirrelevanttodecisions youmustpaythemregardlessofyourchoice FCisasunkcost Thefirmmustpayitsfixedcostswhetheritproducesorshutsdown So FCshouldnotmatterinthedecisiontoshutdown 0 AFirm sLong RunDecisiontoExit Costofexitingthemarket revenueloss TRBenefitofexitingthemarket costsavings TC zeroFCinthelongrun So firmexitsifTR TCDividebothsidesbyQtowritethefirm sdecisionruleas ExitifP ATC 0 ANewFirm sDecisiontoEnterMarket Inthelongrun anewfirmwillenterthemarketifitisprofitabletodoso ifTR TC DividebothsidesbyQtoexpressthefirm sentrydecisionas EnterifP ATC 0 Thefirm sLRsupplycurveistheportionofitsMCcurveaboveLRATC TheCompetitiveFirm sSupplyCurve LRATC 0 Determinethisfirm stotalprofit Identifytheareaonthegraphthatrepresentsthefirm sprofit Acompetitivefirm 0 ACTIVELEARNING2Identifyingafirm sprofit Acompetitivefirm Profitperunit P ATC 10 6 4 Totalprofit P ATC xQ 4x50 200 0 ACTIVELEARNING2Answers Determinethisfirm stotalloss assumingAVC 3 Identifytheareaonthegraphthatrepresentsthefirm sloss Acompetitivefirm 0 ACTIVELEARNING3Identifyingafirm sloss Acompetitivefirm lossperunit 2 Totalloss ATC P xQ 2x30 60 0 ACTIVELEARNING3Answers MarketSupply Assumptions 1 Allexistingfirmsandpotentialentrantshaveidenticalcosts 2 Eachfirm scostsdonotchangeasotherfirmsenterorexitthemarket 3 Thenumberoffirmsinthemarketisfixedintheshortrun duetofixedcosts variableinthelongrun duetofreeentryandexit 0 TheSRMarketSupplyCurve AslongasP AVC eachfirmwillproduceitsprofit maximizingquantity whereMR MC RecallfromChapter4 Ateachprice themarketquantitysuppliedisthesumofquantitiessuppliedbyallfirms 0 TheSRMarketSupplyCurve Example 1000identicalfirmsAteachP marketQs 1000 x onefirm sQs 0 Entry ExitintheLongRun IntheLR thenumberoffirmscanchangeduetoentry exit Ifexistingfirmsearnpositiveeconomicprofit newfirmsenter SRmarketsupplyshiftsright Pfalls reducingprofitsandslowingentry Ifexistingfirmsincurlosses somefirmsexit SRmarketsupplyshiftsleft Prises reducingremainingfirms losses 0 TheZero ProfitCondition Long runequilibrium Theprocessofentryorexitiscomplete remainingfirmsearnzeroeconomicprofit ZeroeconomicprofitoccurswhenP ATC SincefirmsproducewhereP MR MC thezero profitconditionisP MC ATC RecallthatMCintersectsATCatminimumATC Hence inthelongrun P minimumATC 0 WhyDoFirmsStayinBusinessifProfit 0 Recall economicprofitisrevenueminusallcosts includingimplicitcostsliketheopportunitycostoftheowner stimeandmoney Inthezero profitequilibrium firmsearnenoughrevenuetocoverthesecostsaccountingprofitispositive 0 TheLRMarketSupplyCurve Inthelongrun thetypicalfirmearnszeroprofit TheLRmarketsupplycurveishorizontalatP minimumATC 0 SR LREffectsofanIncreaseinDemand Onefirm Afirmbeginsinlong runeq m butthenanincreaseindemandraisesP leadingtoSRprofitsforthefirm Overtime profitsinduceentry shiftingStotheright reducingP drivingprofitstozeroandrestoringlong runeq m A B C 0 WhytheLRSupplyCurveMightSlopeUpward TheLRmarketsupplycurveishorizontalif1 allfirmshaveidenticalcosts and2 costsdonotchangeasotherfirmsenterorexitthemarket Ifeitheroftheseassumptionsisnottrue thenLRsupplycurveslopesupward 0 1 FirmsHaveDifferentCosts AsPrises firmswithlowercostsenterthemarketbeforethosewithhighercosts FurtherincreasesinPmakeitworthwhileforhigher costfirmstoenterthemarket whichincreasesmarketquantitysupplied Hence LRmarketsupplycurveslopesupward AtanyP Forthemarginalfirm P minimumATCandprofit 0 Forlower costfirms profit 0 0 2 CostsRiseasFirmsEntertheMarket Insomeindustries thesupplyofakeyinputislimited e g amountoflandsuitableforfarmingisfixed Theentryofnewfirmsincreasesdemandforthisinput causingitspricetorise Thisincreasesallfirms costs Hence anincreaseinPisrequiredtoincreasethemarketquantitysupplied sothesupplycurveisupward sloping 0 CONCLUSION TheEfficiencyofaCompetitiveMarket Profit maximization MC MRPerfectcompetition P MRSo inthecompeti