Friday, March 09, 2007

Costs/Perfect Competition

Here is the link to a ppt on perfect competition. It's in html format, so everyone should be able to access it. And no, I didn't write it.

Second - some more links for your economics enjoyment -

Profit Maximization MR/MC stuff:

And part II to that: This will become more important as we get into the other three types of markets. for basic cost information. There are teacher instructions in the bottom frame that explain what's going on. More costs stuff Costs & Shutdown rule explicit vs implicit costs short run vs long run Long run ATC Types of competition Spectrum of competition

There are a lot more, this guy has tons of info. But...I think that's enough to start with. :)

Note: He does separate oligopoly & cartel, which are together in your book.



kfbare said...

I really liked the ppt on long run vs. short run!

kfbare said...

The long run atc graph decrease to a certain output point and then starts to increase. I understand the decreasing, as a company specializes and becomes more efficient. I don't understand the increase. Why wouldn't the company realize that it is getting TOO big and its atc is increasing with their increasing output??

Wojtek said...

KB, I am not sure my answer but I'll share how I see it.
There are limits of growth and increase in efficiency. As the growth is small the company can easily adjust and benefit from it. As the quantity of output goes up- the size of company does too. That means more machines, buildings, storage spaces, taxes and staff. - maybe even additional trainings, new licenses and state approvals. Fixed costs and variable costs go up in any of those examples.

My other thought is the limit of efficiency. 3 people can produce a chair more efficient than one, 10 can do it better than 3 but what if you have 100 of workers? aa it's not the best example but it makes a point.

KM said...

Wojtek has good examples there - it's not something that a company thinks - "Oh, well, my ATC's are just going so high..." - it's the additional resources that are used as they go along. There becomes a point of inefficiency.

Good job!