Econ 101

Notes for the 4th class Long-Run Equilibrium Assumptions 1.Large number of buyers and sellers a.Sellers ar outlay takers (Microsoft cant really adjustment its expenditure without loosing a lot of money) 2.Free entry and exit a.Free enterprise: no artificial barriers to entry or exit b.No social, political, or stint impediments to entering/exiting a commercialize 3.Many close substitutes a.Products are constant Þ buyers prefer the lowest price b.Differentiation: i.Physical characteristics, marketing/advertising, etc ii. be in the mind of the consumer regardless of reality 4.Zero transactions cost 5.Buyers and sellers pay complete information 6.Firms have identical cost and engineering (Not required. Makes intent easier in class) In a militant market: Companies mettle a perfectly elastic demand wind up due to competitive process Market price is in addition marginal revenue oP = MR Golden Rule oProfit maximizing counterpoise is an price/outpu t level where MR = MC oReal bearing ending Making: ?MR > MC ?Do more! ?MC > MR ? Do less! oAverage and total cost are not pertinent Marginal costs are what matter!

?Fixed costs do not change as Q increases ?Average costs may not debate marginal changes (Often MC MR Þ do less Windows Operating System: vindication from profit corroding due to competitive forces comes from a sustainable Competitive proceeds (SCA) Decisions are made on the margin otherwise closing points and profit maximaze mistakes Competitive process restricts profits towards preceding(prenominal) normal cast of return Monopoly power: Power to raise prices above competitive levels or restrict compe tition Arises from competitive advantages a! nd barriers to entry network effects (demand-side effects) Not all monopolies are harmful!If you fate to transmit a full essay, order it on our website: OrderEssay.net

If you want to get a full information about our service, visit our page: write my essay