Listening During Conflict

each(prenominal)(prenominal) Firm is a  equipment casualty Taker
D

S

Competition
P*

Chapter 9: The Favorite Market for 
Economists

Q*

Firm

Market
??????by Bret S. McMurran, all(a) rights reserved

??????by Bret S. McMurran, all rights reserved

Market Structure:
Nature of Competition
(1) Large number of buyers & sellers with  each(prenominal) 
buyer and seller representing a small part of 
the market.
(2) Each seller is selling an identical product 
from the point of  raft of the consumers 
(homogeneous product).
(3) No substantial barriers to entry into the 
market or  progeny from the market.  

Each Firm is a  charge Taker
D

S

P*

Q*

Firm

Market

??????by Bret S. McMurran, all rights reserved

??????by Bret S. McMurran, all rights reserved

Market Structure
These characteristics makes each  secure in a 
competitive market a Price Taker.
No buyer nor seller can influence the  cost 
one buys or sells at.

Each Firm is a Price Taker
D

S
DFirm

P*

P*

Q*

Market
??????by Bret S. McMurran, all rights reserved

Firm
??????by Bret S. McMurran, all rights reserved

Each Firm is a Price Taker
D

Firms MR

S
DFirm

P*

P*

$10

MR = P* = Demand

Q*

Firm

Market

??????by Bret S. McMurran, all rights reserved

??????by Bret S.



McMurran, all rights reserved

Firms TR & MR Curves

Profit Maximizing Rule

TR = P x Q 
MR = The increase in TR when one more  unit of measurement 
of output is sold.
TR = Addition of all the MR numbers  
(TR = ?MRs =P x Q)

In  show for a firm to maximize profits, a firm 
must produce up to the point where  borderline 
Cost (MC) is equal to Marginal Revenue (MR), 
or as close as possible without the MC being 
great than MR.
If MC = MR at two places, produce the output 
where MC = MR the second time.

??????by Bret S. McMurran, all rights reserved

Firms TR & MR 

??????by Bret S. McMurran, all rights reserved

militant Firm: Example

P

Q

TR

MR

$10

1

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