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PERFECT COMPETITION, LONG-RUN PRODUCTION ANALYSIS: In the long run, a perfectly competitive firm adjusts plant size, or the quantity of capital, to maximize long-run profit. In addition, the entry and exit of firms into and out of a perfectly competitive market guarantees that each perfectly competitive firm earns nothing more or less than a normal profit. As a perfectly competitive industry reacts to changes in demand, it traces out positive, negative, or horizontal long-run supply curve due to increasing, decreasing, or constant cost.
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Lesson 6: Supply | Unit 1: Selling Basics
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Page: 2 of 19
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There's more we need to consider about supply. First the supply price. Supply price is the minimum price that sellers would be willing and able to accept for a given quantity of a good. - Sellers have an lower limit on the price that they would be willing and able to accept for a good, compared to the upper limit of the demand price.
- Sellers are willing and able to accept a higher price. In fact, they would be glad to sell a good for a billion dollars... or more.
- The minimum supply price is based on the fact of economic life that people prefer more to less.
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MARGINAL REVENUE PRODUCT The change in total revenue resulting from a unit change in a variable input, keeping all other inputs unchanged. Marginal revenue product, usually abbreviated MRP, is found by dividing the change in total revenue by the change in the variable input or by multiplying marginal physical product by marginal revenue. This is also termed value of the marginal product. Marginal revenue product is a key concept for understanding the demand for productive inputs.
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BEIGE MUNDORTLE
[What's This?]
Today, you are likely to spend a great deal of time flipping through the yellow pages wanting to buy either a replacement washer for your kitchen faucet or a stretchable, flexible watch band. Be on the lookout for slightly overweight pizza delivery guys.
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The word "fiscal" is derived from a Latin word meaning "moneybag."
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"The past is a foreign country; they do things differently there." -- Leslie Poles Hartley, Writer
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SEC
Securities and Exchange Commision
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