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After reading this chapter, you should be able to:
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Discuss the characteristics of perfectly competitive market structure
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Understand the Demand curve for a perfectly competitive firm vs. the Demand
curve for a perfectly competitive industry.
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Understand the formula for calculating Profits, MR, MC, P and the rule for
profit maximization for a perfectly competitive firm.
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Understand the Pricing and Output decisions for perfectly competitive firms
based on the desire to maximize profits.
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Calculate short-run profits/losses given price and cost information or by using
a graph.
- Identify
the short-run break-even and shut-down points for a firm on a graph
or with the use of price and cost information.
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Describe the supply curve for a perfectly competitive firm and to identify it
using a graph of such a firm's cost curves.
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Discuss price and profit signals determine entry and exit dynamics in
competitive industries.
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Distinguish between industries that experience long-run decreasing costs,
long-run constant costs, and long-run increasing costs.
- Discuss
Economic Efficiency in the context of equilibrium in competitive
markets.
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