微观经济管理学与财务知识分析(ppt 8)

PerfectCompetition,Chapter11,LaugherCurve,Q.Howmanyeconomistsdoesittaketoscrewinalightbulb?A.Eight.Onetoscrewitinandseventoholdeverythingelseconstant.,PerfectCompetition,Theconceptofcompetitionisusedintwowaysineconomics.Competitionasaprocessisarivalryamongfirms.Competitionastheperfectlycompetitivemarketstructure.,CompetitionasaProcess,Competitioninvolvesonefirmtryingtotakeawaymarketsharefromanotherfirm.Asaprocess,competitionpervadestheeconomy.,CompetitionasaMarketStructure,Itispossibletoimaginesomethingthatdoesnotexistaperfectlycompetitivemarketinwhichtheinvisiblehandworksunimpeded.,CompetitionasaMarketStructure,Competitionistheendresultofthecompetitiveprocessunderhighlyrestrictiveassumptions.,Aperfectlycompetitivemarketisoneinwhicheconomicforcesoperateunimpeded.,APerfectlyCompetitiveMarket,Aperfectlycompetitivemarketisoneinwhicheconomicforcesoperateunimpeded.,APerfectlyCompetitiveMarket,Aperfectlycompetitivemarketmustmeetthefollowingrequirements:,Bothbuyersandsellersarepricetakers.Thenumberoffirmsislarge.Therearenobarrierstoentry.Thefirmsproductsareidentical.Thereiscompleteinformation.Firmsareprofitmaximizers.,TheNecessaryConditionsforPerfectCompetition,Bothbuyersandsellersarepricetakers.Apricetakerisafirmorindividualwhotakesthemarketpriceasgiven.Inmostmarkets,householdsarepricetakerstheyacceptthepriceofferedinstores.,TheNecessaryConditionsforPerfectCompetition,Bothbuyersandsellersarepricetakers.,Theretailerisnotperfectlycompetitive.Astoreisnotapricetakerbutapricemaker.,TheNecessaryConditionsforPerfectCompetition,Thenumberoffirmsislarge.,Largemeansthatwhatonefirmdoeshasnobearingonwhatotherfirmsdo.Anyonefirmsoutputisminusculewhencomparedwiththetotalmarket.,TheNecessaryConditionsforPerfectCompetition,Therearenobarrierstoentry.,Barrierstoentryaresocial,political,oreconomicimpedimentsthatpreventotherfirmsfromenteringthemarket.Barrierssometimestaketheformofpatentsgrantedtoproduceacertaingood.,TheNecessaryConditionsforPerfectCompetition,Therearenobarrierstoentry.,Technologymaypreventsomefirmsfromenteringthemarket.Socialforcessuchasbankersonlylendingtocertainpeoplemaycreatebarriers.,TheNecessaryConditionsforPerfectCompetition,Thefirmsproductsareidentical.,Thisrequirementmeansthateachfirmsoutputisindistinguishablefromanycompetitorsproduct.,TheNecessaryConditionsforPerfectCompetition,Thereiscompleteinformation.,Firmsandconsumersknowallthereistoknowaboutthemarketprices,products,andavailabletechnology.Anytechnologicaladvancementwouldbeinstantlyknowntoallinthemarket.,TheNecessaryConditionsforPerfectCompetition,Firmsareprofitmaximizers.,Thegoalofallfirmsinaperfectlycompetitivemarketisprofitandonlyprofit.Firmownersreceiveonlyprofitascompensation,notsalaries.,TheDefinitionofSupplyandPerfectCompetition,Ifallthenecessaryconditionsforperfectcompetitionexist,wecantalkformallyaboutthesupplyofaproducedgood.Thisfollowsfromthedefinitionofsupply.,TheDefinitionofSupplyandPerfectCompetition,Supplyisascheduleofquantitiesofgoodsthatwillbeofferedtothemarketatvariousprices.,TheDefinitionofSupplyandPerfectCompetition,Thisdefinitionrequiresthesuppliertobeapricetaker(thefirstconditionforperfectcompetition).,Sincemostsuppliersarepricemakers,anyanalysismustbemodifiedaccordingly.,TheDefinitionofSupplyandPerfectCompetition,Becauseofthedefinitionofsupply,ifanyoftheconditionsarenotmet,theformaldefinitionofsupplydisappears.,TheDefinitionofSupplyandPerfectCompetition,Thatthenumberofsuppliersbelarge(thesecondcondition),meansthattheydonothavetheabilitytocollude.,TheDefinitionofSupplyandPerfectCompetition,Conditions3through5makeitimpossibleforanyfirmtoforgetaboutthehundredsofotherfirmsjustitchingtoreplacetheirsupply.,Condition6specifiesafirmsgoalprofit.,TheDefinitionofSupplyandPerfectCompetition,Evenifwecannottechnicallyspecifyasupplyfunction,supplyforcesarestillstrongandmanyoftheinsightsofthecompetitivemodelcanbeappliedtofirmbehaviorinothermarketstructures.,DemandCurvesfortheFirmandtheIndustry,Thedemandcurvesfacingthefirmisdifferentfromtheindustrydemandcurve.Aperfectlycompetitivefirmsdemandscheduleisperfectlyelasticeventhoughthedemandcurveforthemarketisdownwardsloping.,DemandCurvesfortheFirmandtheIndustry,Thismeansthatfirmswillincreasetheiroutputinresponsetoanincreaseindemandeventhoughthatwillcausethepricetofallthusmakingallfirmscollectivelyworseoff.,Market,Firm,Individualfirmdemand,MarketDemandVersusIndividualFirmDemandCurve,Profit-MaximizingLevelofOutput,Thegoalofthefirmistomaximizeprofits.Whenitdecideswhatquantitytoproduceitcontinuallyaskshowchangesinquantityaffectprofit.,Profit-MaximizingLevelofOutput,Sinceprofitisthedifferencebetweentotalrevenueandtotalcost,whathappenstoprofitinresponsetoachangeinoutputisdeterminedbymarginalrevenue(MR)andmarginalcost(MC).,AfirmmaximizesprofitwhenMC=MR.,Profit-MaximizingLevelofOutput,Marginalrevenue(MR)thechangeintotalrevenueassociatedwithachangeinquantity.,Marginalcost(MC)-thechangeintotalcostassociatedwithachangeinquantity.,MarginalRevenue,Sinceaperfectcompetitoracceptsthemarketpriceasgiven,foracompetitivefirm,marginalrevenueisprice(MR=P).,MarginalCost,Initially,marginalcostfallsandthenbeginstorise.Marginalconceptsarebestdefinedbetweenthenumbers.,HowtoMaximizeProfit,Tomaximizeprofits,afirmshouldproducewheremarginalcostequalsmarginalrevenue.,HowtoMaximizeProfit,Ifmarginalrevenuedoesnotequalmarginalcost,afirmcanincreaseprofitbychangingoutput.,Thesupplierwillcontinuetoproduceaslongasmarginalcostislessthanmarginalrevenue.,HowtoMaximizeProfit,Thesupplierwillcutbackonproductionifmarginalcostisgreaterthanmarginalrevenue.,Thus,theprofit-maximizingconditionofacompetitivefirmisMC=MR=P.,MarginalCost,MarginalRevenue,andPrice,TheMarginalCostCurveIstheSupplyCurve,Themarginalcostcurveisthefirmssupplycurveabovethepointwherepriceexceedsaveragevariablecost.,TheMarginalCostCurveIstheSupplyCurve,TheMCcurvetellsthecompetitivefirmhowmuchitshouldproduceatagivenprice.,Thefirmcandonobetterthanproducingthequantityatwhichmarginalcostequalspricewhichinturnequalsmarginalrevenue.,TheMarginalCostCurveIstheFirmsSupplyCurve,FirmsMaximizeTotalProfit,Whenwespeakofmaximizingprofit,werefertomaximizingtotalprofit,notprofitperunit.Firmsdonotcareaboutprofitperunit;aslongasanincreaseinoutputwillincreasetotalprofits,aprofit-maximizingfirmshouldincreaseoutput.,ProfitMaximizationUsingTotalRevenueandTotalCost,Profitismaximizedwheretheverticaldistancebetweentotalrevenueandtotalcostisgreatest.Atthatoutput,MR(theslopeofthetotalrevenuecurve)andMC(theslopeofthetotalcostcurve)areequal.,ProfitDeterminationUsingTotalCostandRevenueCurves,TotalProfitattheProfit-MaximizingLevelofOutput,WhiletheP=MR=MCconditiontellsushowmuchoutputacompetitivefirmshouldproducetomaximizeprofit,itdoesnottellustheprofitthefirmmakes.,DeterminingProfitandLossFromaTableofCosts,Profitcanbecalculatedfromatableofcostsandrevenues.Profitisdeterminedbytotalrevenueminustotalcost.,DeterminingProfitandLossFromaTableofCosts,Theprofit-maximizingpositionisnotnecessarilyapositionthatminimizeseitheraveragevariablecostoraveragetotalcost.,Itisonlythepositionthatmaximizestotalprofit.,CostsRelevanttoaFirm,CostsRelevanttoaFirm,DeterminingProfitandLossFromaGraph,FindoutputwhereMC=MR.TheintersectionofMC=MR(P)determinesthequantitythefirmwillproduceifitwishestomaximizeprofits.,DeterminingProfitandLossFromaGraph,FindprofitperunitwhereMC=MR.,Todeterminemaximumprofit,youmustfirstdeterminewhatoutputthefirmwillchoosetoproduce.SeewhereMCequalsMR,andthendropalinedowntotheATCcurve.Thisistheprofitperunit.,(a)Profitcase,(b)Zeroprofitcase,(c)Losscase,DeterminingProfitsGraphically,TheMcGraw-HillCompanies,Inc.,2000,Irwin/McGraw-Hill,ZeroProfitorLossWhereMC=MR,FirmscanalsoearnzeroprofitorevenalosswhereMC=MR.Eventhougheconomicprofitiszero,allresources,includingentrepreneurs,arebeingpaidtheiropportunitycosts.,ZeroProfitorLossWhereMC=MR,Inallthreecases(profit,loss,zeroprofit),determiningtheprofit-maximizingoutputleveldoesnotdependonfixedcostoraveragetotalcost,byonlywheremarginalcostequalsprice.,TheShutdownPoint,Thefirmwillshutdownifitcannotcoveraveragevariablecosts.Afirmshouldcontinuetoproduceaslongaspriceisgreaterthanaveragevariablecost.Oncepricefallsbelowthatpointitmakessensetoshutdowntemporarilyandsavethevariablecosts.,TheShutdownPoint,Theshutdownpointisthepointatwhichthefirmwillgainmorebyshuttingdownthanitwillbystayinginbusiness.,TheShutdownPoint,Aslongastotalrevenueismorethantotalvariablecost,temporarilyproducingatalossisthefirmsbeststrategysinceitistakinglessofalossthanitwouldbyshuttingdown.,TheShutdownDecision,Short-RunMarketSupplyandDemand,Whilethefirmsdemandcurveisperfectlyelastic,theindustrysisdownwardsloping.Fortheindustryssupplycurveweuseamarketsupplycurve.,Short-RunMarketSupplyandDemand,Intheshortrunwhenthenumberoffirmsinthemarketisfixed,themarketsupplycurveisjustthehorizontalsumofallthefirmsmarginalcostcurves,takingaccountofanychangesininputpricesthatmightoccur.,Short-RunMarketSupplyandDemand,Sinceallfirmshaveidenticalmarginalcostcurves,aquickwayofsummingthequantitiesistomultiplythequantitiesfromthemarginalcostcurveofarepresentativefirmbythenumberoffirmsinthemarket.,Long-RunCompetitiveEquilibrium,Profitsandlossesareinconsistentwithlong-runequilibrium.Profitscreateincentivesfornewfirmstoenter,outputwillincrease,andthepricewillfalluntilzeroprofitsaremade.Onlyzeroprofitwillstopentry.,Long-RunCompetitiveEquilibrium,Theexistenceoflosseswillcausefirmstoleavetheindustry.,Zeroprofitconditionistherequirementthatinthelongrunzeroprofitsexist.Thezeroprofitconditiondefinesthelong-runequilibriumofacompetitiveindustry.,Long-RunCompetitiveEquilibrium,Zeroprofitdoesnotmeanthattheentrepreneurdoesnotgetanythingforhisefforts.,Long-RunCompetitiveEquilibrium,Inordertostayinbusinesstheentrepreneurmustreceivehisopportunitycostornormalprofitstheownersofbusinesswouldhavereceivedinthenest-bestalternative.,Long-RunCompetitiveEquilibrium,Normalprofitsareincludedasacostandarenotincludedineconomicprofit.Economicprofitsareprofitsabovenormalprofits.,Long-RunCompetitiveEquilibrium,Evenifsomefirmhassuperefficientworkersormachinesthatproducerent,itwillnottakelongforcompetitorstomatchtheseefficienciesanddrivedowntheprice.,Rentisanincomereceivedbyaspecializedfactorofproduction.,Long-RunCompetitiveEquilibrium,Thezeroprofitconditionisenormouslypowerful.,Itmakestheanalysisofcompetitivemarketsfarmoreapplicabletotherealworldthancanastrictapplicationoftheassumptionofperfectcompetition.,Long-RunCompetitiveEquilibrium,0,AdjustmentfromtheLongRuntotheShortRun,Industrysupplyanddemandcurvescometogethertoleadtolong-runequilibrium.,AnIncreaseinDemand,Anincreaseindemandleadstohigherpricesandhigherprofits.Existingfirmsincreaseoutputandnewfirmswillenterthemarket,increasingoutputstillmore,pricewillfalluntilallprofitiscompetedaway.,AnIncreaseinDemand,Ifthethemarketisaconstant-costindustry,thenewequilibriumwillbeattheoriginalpricebutwithahigheroutput.,Amarketisaconstant-costindustryifthelong-runindustrysupplycurveisperfectlyelastic.,AnIncreaseinDemand,Theoriginalfirmsreturntotheiroriginaloutputbutsincetherearemorefirmsinthemarket,thetotalmarketoutputincreases.,AnIncreaseinDemand,Intheshortrun,thepricedoesmoreoftheadjusting.,Inthelongrun,moreoftheadjustmentisdonebyquantity.,Profit,B,A,MarketResponsetoanIncreaseinDemand,B,A,C,Long-RunMarketSupply,Twootherpossibilitiesexist:Increasing-costindustryfactorpricesriseasnewfirmsenterthemarketandexistingfirmsexpandcapacity.Decreasing-costindustryfactorpricesfallasindustryoutputexpands.,AnIncreasing-CostIndustry,Ifinputsarespecialized,