Market Supply with a Fixed Number of Firms
(a) Individual Firm Supply
PriceSMC$2.001.00Q (firm)$2.001.00Q (market)PriceSupply(b) Market Supply
01002000100,000200,000汪艳
经济管理学院
双语教学示范课程
252013-7-23
?Producer surplus
?…is the amount a seller actually is paid for a good minus the amount the seller is willing to be paid.?It measures thebenefit to sellers participating in a market.
汪艳
经济管理学院
双语教学示范课程
262013-7-23
Producer Surplus at Price P1
Price
SupplyPB1
ProducerCsurplusP2A汪艳
0
Q2
Q1
Quantity经济管理学院
双语教学示范课程
272013-7-23
The Firm’s Long-RunDecision to Exit or Entera Market
In the long run, the firm exits if the revenue it would get from producing is less than its total cost.
?Exit ifTR < TC
?Exit if(TR/Q) < (LTC/Q)?Exit ifAR < LAC
?P < LAC
汪艳
经济管理学院
双语教学示范课程
282013-7-23
