The Long Run: Market Supplywith Entry and Exit
?Firms will enter or exit the market until profitis driven tozero.
?In the long run, Pequals the LACmin.?The long-run market supply curve is horizontalat this price.
汪艳
Why?经济管理学院
双语教学示范课程
362013-7-23
Market Supply with Entry and Exit
(a) Firm’s Zero-Profit Condition
PricePrice(b) Market Supply
MCLACP= minLACSupply0Quantity (firm)0Quantity (market)汪艳
经济管理学院
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2013-7-23
?A Shift in Demand in the Short Run and Long Run
?An increase in demand raises P and Qin the short run.
?Firms earn profits because P now exceeds AC.
汪艳
经济管理学院
双语教学示范课程
382013-7-23
An Increase in Demand in the Short Run and Long Run
(a) Initial Condition
P
P
MC1P1
LAC1P1
AShort-run supply D10Q (firm)0
Q1
Q (market)392013-7-23
汪艳
经济管理学院
双语教学示范课程
(b) Short-Run Response
P
ProfitP2P1MC1LAC1PS1P2P1BAD2D10Q (firm)0Q1
Q2Q (market)汪艳
经济管理学院
双语教学示范课程
402013-7-23