ECSENOMICS Chapter 8 Analysis of Perfectl Competitive Markets McGraw-Hilllrwin CopyrightC 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Chapter 8 Analysis of Perfectly Competitive Markets
ECSENOMICS Demand Curve Looks horizontal to a Perfect Competitor T60 Figure 8-1 (a) Industry (b) Firm S d S Q q Industry output Firm outi McGraw-Hilllrwin CopyrightC 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. T-60 Figure 8-1 Demand Curve Looks Horizontal to a Perfect Competitor
ECSENOMICS Firm's Supply Curve Is Its Rising Marginal Cost Curve T61 Figure 8-2 Firm's Supply and Marginal Cost AC MO 20 q Quantity (thousands) McGraw-Hilllrwin CopyrightC 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Firm’s Supply Curve Is Its Rising Marginal Cost Curve T-61 Figure 8-2
ECSENOMICS Firm's Supply Curve Travels Down the MC Curve to the shutdown point T62 Figure 8-3 Zero-Profit and Shutdown Prices AC AVC Zero-profit point M Shutdown point Quantity McGraw-Hilllrwin CopyrightC 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Firm’s Supply Curve Travels Down the MC Curve to the Shutdown Point T-62 Figure 8-3
ECSENOMICS Add All Firms' Supply Curves to Derive Market Supply T63 Figure 8-4 (a) Firm As Supply (b)Firm Bs Supply (e) Market Supply 60 Market 40 supply curve 20 20 S 51015 Q=9A+9B Quantity A(thousands) Quantity B(thousands) Total quantity(thousands) McGraw-Hilllrwin CopyrightC 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Add All Firms’ Supply Curves to Derive Market Supply T-63 Figure 8-4
ECSENOMICS Effect of Increase in Demand on Price Varies in Different Time periods T-64 Figure 8-5 (a) Short-Run Equilibrium (b)Long-Run Equilibrium D 0 Quantity Quantity McGraw-Hilllrwin CopyrightC 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Effect of Increase in Demand on Price Varies in Different Time Periods T-64 Figure 8-5
ECSENOMICS Constant-Cost Case T-65 Figure 8-7 Constant-cost supply D Q Quantity McGraw-Hilllrwin CopyrightC 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Constant-Cost Case T-65 Figure 8-7
ECSENOMICS Increasing-Cost Case T66 Figure 8-8 ncreasing-cost supply D 0 M M Quantity McGraw-Hilllrwin CopyrightC 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Increasing-Cost Case T-66 Figure 8-8
ECSENOMICS Factors with Fixed Supply Earn rent T67 Figure 8-9 Fixed supply E 8 N S Quantity McGraw-Hilllrwin CopyrightC 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Factors with Fixed Supply Earn Rent T-67 Figure 8-9
ECSENOMICS Backward-Bending Supply Curve T68 Figure 8-10 La bor supply E Q Quantity McGraw-Hilllrwin CopyrightC 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Backward-Bending Supply Curve T-68 Figure 8-10
