MANAGERIAL ECONOMICS 11 th Edition
description
Transcript of MANAGERIAL ECONOMICS 11 th Edition
![Page 1: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/1.jpg)
MANAGERIAL MANAGERIAL ECONOMICS 11ECONOMICS 11thth Edition Edition
ByByMark HirscheyMark Hirschey
![Page 2: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/2.jpg)
Competitive MarketsCompetitive MarketsChapter 10Chapter 10
![Page 3: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/3.jpg)
Chapter 10Chapter 10OVERVIEWOVERVIEW
Competitive Environment Factors That Shape the Competitive
Environment Competitive Market Characteristics Profit Maximization in Competitive
Markets Marginal Cost and Firm Supply Competitive Market Supply Curve Competitive Market Equilibrium
![Page 4: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/4.jpg)
Chapter 10Chapter 10KEY CONCEPTSKEY CONCEPTS
market structure market potential entrant product
differentiation competitive markets barrier to entry barrier to mobility barrier to exit
perfect competition price takers
normal profit economic profit economic losses marginal analysis competitive firm
short-run supply curve
competitive firm long-run supply curve.
![Page 5: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/5.jpg)
Competitive Environment What is Market Structure?
Market structure is the competitive environment. Number of buyers and sellers. Potential entrants. Barriers to entry and exit, etc.
Vital Role of Potential Entrants Competition comes from actual and potential
competitors. Potential entrants often affect price/output
decisions.
![Page 6: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/6.jpg)
Factors that Shape the Competitive Environment
Product Differentiation R&D, innovation, and advertising are important
in many markets. Production Methods
Economies of scale can preclude small-firm size.
Entry and Exit Conditions Barriers to entry and exit can shelter
incumbents from potential entrants. Buyer Power
Powerful buyers can limit seller power.
![Page 7: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/7.jpg)
Competitive Market Characteristics
Basic Features Many buyers and sellers. Product homogeneity. Free entry and exit. Perfect information.
Examples of Competitive Markets Agricultural commodities. Prominent markets for intermediate goods and
services. Unskilled labor market.
![Page 8: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/8.jpg)
Profit Maximization in Competitive Markets
Profit Maximization Imperative Normal profit is return necessary to
attract and maintain capital investment. Efficient firms can earn normal profit. Inefficient firms suffer losses.
Role of Marginal Analysis Set Mπ = MR – MC = 0 to maximize
profits. MR=MC when profits are maximized.
![Page 9: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/9.jpg)
![Page 10: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/10.jpg)
![Page 11: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/11.jpg)
Marginal Cost and Firm Supply Short-run Firm Supply
Competitive market price (P) is shown as a horizontal line because P=MR.
Firm’s marginal-cost curve shows the amount of output the firm would be willing to supply at any market price.
Marginal cost curve is the short-run supply curve so long as P > AVC .
![Page 12: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/12.jpg)
![Page 13: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/13.jpg)
Long-run Firm Supply Marginal cost curve is the long-run
supply curve so long as P > ATC. In long run, firm must cover all
necessary costs of production and earn a normal profit.
![Page 14: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/14.jpg)
![Page 15: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/15.jpg)
Competitive Market Supply Curve
Market Supply With a Fixed Number of Competitors Supply is the sum of competitor output.
Market Supply With Entry and Exit Entry results in more firms, increased output, a
rightward shift in the supply curve, and drives down prices and profits.
Exit reduces the number of firms, decreases the quantity of output, shifts the supply curve leftward, and allows prices and profits to rise for remaining competitors.
![Page 16: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/16.jpg)
![Page 17: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/17.jpg)
![Page 18: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/18.jpg)
Competitive Market Equilibrium Balance of Supply and Demand
Equilibrium is a balance of supply and demand.
Normal Profit Equilibrium With a horizontal market demand curve,
MR=P. P=MR=MC=ATC. There are no economic profits. All firms earn a normal rate of return.
![Page 19: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/19.jpg)
![Page 20: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/20.jpg)
![Page 21: MANAGERIAL ECONOMICS 11 th Edition](https://reader035.fdocuments.in/reader035/viewer/2022081520/5681678a550346895ddca1ca/html5/thumbnails/21.jpg)