The Dynamics of Competitive Markets: Equilibrium, Profit, and Efficiency | California State University, Northridge - Edubirdie

University:
California State University, Northridge
Course:
ECON 160 | Principles of Microeconomics
Academic year:

2023
Views:

29

Pages:

2
Author:

Mahmoud M.

Microeconomics notes Competitive Market - A market without buyers or sellers has market power We need a competitive market to set the equilibrium price The supply curve is the sum of the MC curves of all firms in the market. Product performance in a competitive economy Product prices Technology Expectations Taxes and subsidies Institutions in the market I. Market supply curve A4 entry and exit. As more firms enter the market, the supply curve shifts (increases) to the right, which lowers price by b. Profits are lost when prices are too low. This causes companies to exit the market and prices to return to equilibrium. B. Zero Profits Trend a. Supports income entry and exit decisions Economic Profit - Difference between total revenue and total operating costs c. When income from the business disappears, entry and exit cease and the market stabilizes d. As long as existing producers can easily expand their production or new companies enter the market, economic gains will not last long and will return to zero. Competition Procedures A. Effectiveness: Effective Promotion Mixture a. Market Mechanisms - Using market prices and sales to express desired results i. Work best in high competition ii. High profits in a particular market, consumer demand outputs iii. A click on the same result shows that the resources are divided by to produce the desired mix. In the competitive market, customers get more than they want for a lower price. Product volatility. As long as market value exists in the short run, the balance of does not remain stable b. When the price of the computer equals the lowest average cost of production of , the loss of profits and costs will stop - there is no more profit. This is , at which time the company will enter the long balance. Long-term balance: 1. Entry and exit stop 2. Zero economic profit (normal profit applies)

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