# 西经高鸿业第三版lecture6

LECTURE6 完全竞争市场

? 完全竞争市场、垄断竞争市场、寡头市场、垄断 市场

? 完全竞争市场是一个非个性化市场， ? 每一个买者和卖者都是市场价格的被动接受者。

Demand and Marginal Revenue Faced by a Competitive Firm
Price \$ per bushel

Firm

Price \$ per bushel

Industry

\$4

d

\$4

D 100 200
Output (bushels)

100

Output (millions of bushels)

P
TR

d ( AR ? MR ? P)

O

Q

Marginal Revenue, Marginal Cost, and Profit Maximization
Comparing R(q) and C(q) Output levels: 0- q0:
? C(q)> R(q)
? Negative profit
Cost, Revenue, Profit (\$s per year)

C(q)

A
B

R(q)

? FC + VC > R(q) ? MR > MC
?

Indicates higher profit at higher output

0

q0

q*

? (q)

Output (units per year)

Marginal Revenue, Marginal Cost, and Profit Maximization
Comparing R(q) and C(q)
Question: Why is profit negative when output is zero?

Cost, Revenue, Profit \$ (per year)

C(q)

A
B

R(q)

0

q0

q*

? (q)

Output (units per year)

Marginal Revenue, Marginal Cost, and Profit Maximization
Comparing R(q) and C(q) Output levels: q0 - q*
? R(q)> C(q)
Cost, Revenue, Profit \$ (per year)

C(q)

? MR > MC
? ?

A
B

R(q)

Indicates higher profit at higher output Profit is increasing

0

q0

q*

? (q)

Output (units per year)

Marginal Revenue, Marginal Cost, and Profit Maximization
Comparing R(q) and C(q) Output level: q*
? R(q)> C(q)
Cost, Revenue, Profit \$ (per year)

C(q)

? MR = MC
? Profit is maximized

A
B

R(q)

0

q0

q*

? (q)

Output (units per year)

Marginal Revenue, Marginal Cost, and Profit Maximization
Question
Why is profit reduced when producing more or less than q*?
Cost, Revenue, Profit \$ (per year)

C(q)

A
B

R(q)

0

q0

q*

? (q)

Output (units per year)

Marginal Revenue, Marginal Cost, and Profit Maximization
Comparing R(q) and C(q) Output levels beyond q*:
? R(q)> C(q)
Cost, Revenue, Profit \$ (per year)

C(q)

? MC > MR
? Profit is decreasing

A
B

R(q)

0

q0

q*

? (q)

Output (units per year)

Marginal Revenue, Marginal Cost, and Profit Maximization
Therefore, it can be said:
Profits are maximized when MC = MR.
Cost, Revenue, Profit \$ (per year)

C(q)

A
B

R(q)

0

q0

q*

? (q)

Output (units per year)

A Competitive Firm Making a Positive Profit
Price 60 (\$ per unit)
50

MC

D
40

Lost profit for q q < q* A B

Lost profit for q 2 > q* ATC

AR=MR=P

C
30

AVC At q*: MR = MC and P > ATC

q1 : MR > MC and q2: MC > MR20 and q0: MC = MR but MC falling 10
0 1 2 3 4 5 6 7 8 9

? ? (P - AC) x q*
or ABCD
10 11

q0

q1

q*

q2

Output

A Competitive Firm Incurring Losses
Price (\$ per unit) C D
At q*: MR = MC and P < ATC Losses =(P- AC) x q* or ABCD

MC B

ATC

A

P = MR AVC
Would this producer continue to produce with a loss?

F

E

q*

Output

P
S ? S ( P)

AVC P ? AVC

O

Q

Consumer and Producer Surplus

Price

10

Consumer Surplus

PS ? P0 Q0 ? ?
S

Q0

0

f (Q)dQ

7

5
Producer Surplus

Between 0 and Q0 consumers A and B receive a net gain from buying the product-consumer surplus

D

Between 0 and Q0 producers receive a net gain from selling each product-producer surplus.

0
Consumer A Consumer B

Q0
Consumer C

Quantity

\$ per unit
MC1 MC2 MC3
The short-run industry supply curve is the horizontal summation of the supply curves of the firms.

S

P3

P2
P1

0

2

4 5

7 8

10

15

Quantity 21

Output Choice in the Long Run
Price (\$ per unit of output)
In the long run, the plant size will be increased and output increased to q3. Long-run profit, EFGD > short run profit ABCD.

LMC LAC

SMC D \$40 C G \$30
In the short run, the firm is faced with fixed inputs. P = \$40 > ATC. Profit is equal to ABCD.

SAC A E B P = MR

F

q1

q2

q3

Output

Long-Run Supply in a Constant-Cost Industry
\$ per unit of output
Economic profits attract new firms. Supply increases to S2 and the market returns to long-run equilibrium.

\$ per unit of output

Q1 increase to Q2. Long-run supply = SL = LRAC. Change in output has no impact on input cost.

MC
P2 P1

AC
P2

S1
C A B

S2

P1

SL

D1 q1 q2
Output

D2
Output

Q1

Q2

Long-Run Supply in an Increasing-Cost Industry
\$ per unit of output \$ per unit of output
Due to the increase in input prices, long-run equilibrium occurs at a higher price.

SMC2

LAC2 SMC1 LAC1

S1 S2

SL

P2 P3 P1

P2 P3 P1 A B

D1 q1 q2
Q1 Q2 Q3

D1

Output

Output

Long-Run Supply in an Decreasing-Cost Industry
\$ per unit of output SMC1 SMC2 LAC1 \$ per unit of output
Due to the decrease in input prices, long-run equilibrium occurs at a lower price.

S1

S2

P2 P1
LAC2

P2 P1 P3 A B SL D1 q1 q2
Q1 Q2 Q3

P3

D2

Output

Output