文档介绍：7. Perfect Competition
1
Characteristics
Numbers of sellers: many price-takers
Availability of substitutes: fully substitutable
Degree of elasticity: perfectly elastic
Similarity of products: homogeneous
Pricing strategy: price at market price
Barriers to entry/exit: no
Long run economic profits=0, price = min AC
P=MR=MC
Equilibrium in a Perfectly Competitive Market
The long-run equilibrium output level for perfectly competitive firms is where MR=MC=ATC, which is where ATC is at a minimum. At this output, economic profit is zero and only a normal return is realized.
In equilibrium, each firm is producing the quantity for which P=MR=MC=ATC, so that no firm earns economic profits.
Quantity
Price
Quantity
Price and cost
MC
ATC
S
D
(a) Market
(b) Firm
Short-Run Profit Maximization under Perfect Competition
Short-run equilibrium output
MR=MC
MR=P=D（price taker）
DWL=0, 市场实现最优配置
MC
ATC
P
Q
Economic profit
Profit maximizing
output
Revenue (costs)
Q
Profit maximizing
output
TR-TC is maximum
TC
TR
Marginal