MBA管理经济学.ppt

11-1Chapter 11Managerial Decisions in Competitive Markets11-2Learning ObjectivesvDiscuss 3 characteristics of perfectly competitive marketsvExplain why the demand curve facing a perfectly competitive firm is perfectly elastic and serves as the firms marginal revenue curvevFind shortrun profitmaximizing output,derive firm and industry supply curves,and identify producer surplus vExplain characteristics of longrun competitive equilibrium for a firm,derive longrun industry supply,and identify economic rent and producer surplusvFind the profitmaximizing level of a variable inputvEmploy empirically estimated values of market price,average variable cost,and marginal cost to calculate profitmaximizing output and profit11-3Perfect CompetitionvFirms are price-takersEach produces only a very small portion of total market or industry outputvAll firms produce a homogeneous productvEntry into&exit from the market is unrestricted11-4Demand for a Competitive Price-TakervDemand curve is horizontal at price determined by intersection of market demand&supplyPerfectly elasticvMarginal revenue equals priceDemand curve is also marginal revenue curve (D=MR)vCan sell all they want at the market priceEach additional unit of sales adds to total revenue an amount equal to price11-5Demand for a Competitive Price-Taking Firm (Figure 11.2)DSQuantityPrice(dollars)QuantityPrice(dollars)P0Q0Panel A MarketPanel B Demand curve facing a price-taker00P0D=MR11-6Profit-Maximization in the Short RunvIn the short run,managers must make two decisions:1.Produce or shut down?If shut down,produce no output and hires no variable inputsIf shut down,firm loses amount equal to TFC2.If produce,what is the optimal output level?If firm does produce,then how much?Produce amount that maximizes economic profitProfit=TR-TC11-7vIn the short run,the firm incurs costs that are:Unavoidable and must be paid even if output is zeroVariable costs that are avoidable if the firm chooses to shut downvIn making the decision to produce or shut down,the firm considers only the(avoidable)variable costs&ignores fixed costsProfit-Maximization in the Short Run11-8Profit Margin(or Average Profit)vLevel of output that maximizes total profit occurs at a higher level than the output that maximizes profit margin(&average profit)Managers should ignore profit margin(average profit)when making optimal decisions11-9Short-Run Output DecisionvFirm will produce output where P=SMC as long as:Total revenue total avoidable cost or total variable cost (TR TVC)vEquivalently,the firm should produce if P AVC11-10Short-Run Output DecisionvThe firm will shut down if:Total revenue cannot cover total avoidable cost(TR TVC)or,equivalently,P AVCProduce zero outputLose only total fixed costsShutdown price is minimum AVC11-11Fixed,Sunk,&Average CostsvFixed,sunk,&average costs are irrelevant in the production decisionFixed costs have no effect on marginal cost or minimum average variable costthus optimal level of output is unaffectedSunk costs are forever unrecoverable and cannot affect current or future decisionsOnly marginal costs,not average costs,matter for the optimal level of output11-12Profit Maximization:P=$36 (Figure 11.3)11-13Profit Maximization:P=$36 (Figure 11.3)11-14Panel A:Total revenue&total costPanel B:Profit curve when P=$36Profit Maximization:P=$36 (Figure 11.4)Break-even pointBreak-even point11-15Short-Run Loss Minimization:P=$10.50 (Figure 11.5)Total cost=$17 x 300 =$5,100Total revenue=$10.50 x 300 =$3,150Profit=$3,150-$5,100 =-$1,95011-16Summary of Short-Run Output DecisionvAVC tells whether to produceShut down if price falls below minimum AVCvSMC tells how much to produceIf P minimum AVC,produce output at which P=SMCvATC tells how much profit/loss if produce =(P ATC)Q11-17Short-Run Supply CurvesvFor an individual price-taking firmPortion of firms marginal cost curve above minimum AVCFor prices below minimum AVC,quantity supplied is zerovFor a competitive industryHorizontal sum of supply curves of all individual firms;always upward slopingSupply prices give marginal costs of production for every firm11-18Short-Run Producer SurplusvShort-run producer surplus is the amount by which TR exceeds TVCThe area above the short-run supply curve that is below market price over the range of output suppliedExceeds economic profit by the amount of TFC11-19Computing Short-Run Producer Surplus (Figure 11.6)11-20Short-Run Firm&Industry Supply(Figure 11.6)11-21Long-Run Profit-Maximizing Equilibrium(Figure 11.7)Profit=($17-$12)x 240=$1,20011-22Long-Run Competitive EquilibriumvAll firms are in profit-maximizing equilibrium(P=LMC)vOccurs because of entry/exit of firms in/out of industryMarket adjusts so P=LMC=LAC11-23Long-Run Competitive Equilibrium (Figure 11.8)11-24Long-Run Industry SupplyvLong-run industry supply curve can be flat(perfectly elastic)or upward slopingDepends on whether constant cost industry or increasing cost industryvEconomic profit is zero for all points on the long-run industry supply curve for both types of industries11-25vConstant cost industryAs industry output expands,input prices remain constant,&minimum LAC is unchangedP=minimum LAC,so curve is horizontal(perfectly elastic)vIncreasing cost industryAs industry output expands,input prices rise,&minimum LAC risesLong-run supply price rises&curve is upward slopingLong-Run Industry Supply11-26Long-Run Industry Supply for a Constant Cost Industry (Figure 11.9)11-27Long-Run Industry Supply for an Increasing Cost Industry (Figure 11.10)Firms output11-28Economic RentvPayment to the owner of a scarce,superior resource in excess of the resources opportunity costvIn long-run competitive equilibrium firms that employ such resources earn zero economic profitPotential economic profit is paid to the resource as economic rentIn increasing cost industries,all long-run producer surplus is paid to resource suppliers as economic rent11-29Economic Rent in Long-Run Competitive Equilibrium(Figure 11.11)11-30Profit-Maximizing Input UsagevProfit-maximizing level of input usage produces exactly that level of output that maximizes profit11-31vMarginal revenue product(MRP)MRP of an additional unit of a variable input is the additional revenue from hiring one more unit of the inputvIf choose to produce:If the MRP of an additional unit of input is greater than the price of input,that unit should be hiredEmploy amount of input where MRP=input priceProfit-Maximizing Input Usage11-32vAverage revenue product(ARP)Average revenue per workervShut down in short run if ARP MRPWhen ARP MRP,TR TVCProfit-Maximizing Input Usage11-33Profit-Maximizing Labor Usage (Figure 11.12)11-34Implementing the Profit-Maximizing Output DecisionvStep 1:Forecast product priceUse statistical techniques from Chapter 7vStep 2:Estimate AVC&SMCAVC=a+bQ+cQ2SMC=a+2bQ+3cQ211-35vStep 3:Check shutdown ruleIf P AVCmin then produceIf P AVCmin then shut downTo find AVCmin substitute Qmin into AVC equationImplementing the Profit-Maximizing Output Decision11-36vStep 4:If P AVCmin,find output where P=SMCSet forecasted price equal to estimated marginal cost&solve for Q*Implementing the Profit-Maximizing Output DecisionP=a+2bQ*+3cQ*211-37vStep 5:Compute profit or lossProfit=TR TC =P x Q*-AVC x Q*-TFC =(P AVC)Q*-TFCIf P AVCmin,firm shuts down&profit is-TFCImplementing the Profit-Maximizing Output Decision11-38Profit&Loss at Beau Apparel (Figure 11.13)11-39Profit&Loss at Beau Apparel (Figure 11.13)11-40SummaryvPerfect competitors are price-takers,produce homogenous output,and have no barriers to entryvThe demand curve for a perfectly competitive firm is perfectly elastic(or horizontal)at the market determined equilibrium price,and marginal revenue equals pricevManagers make two decisions in the short run:(1)produce or shut down,and(2)if produce,how much to produceWhen positive profit is possible,profit is maximized at the output where P=SMCWhen market price falls below minimum AVC the firm shuts down and produces nothing,losing only TFC11-41SummaryvIn long-run competitive equilibrium,all firms are in profit-maximizing equilibrium(P=LMC)No incentive for firms to enter or exit the industry because economic profit is zero(P=LAC)vChoosing either output or input usage leads to the same optimal output decision and profit levelvFive steps to find the profit-maximizing rate of production and the level of profit for a competitive firm:1)Forecast the price of the product2)Estimate average variable cost and marginal cost3)Check the shutdown rule4)If P min AVC find the output level where P=SMC5)Compute profit or loss