证明规模报酬递增时，长期平均成本下降；边际产品大于平均产品时，平均产品上升。解释为什么在美国农业中更多地利用机械化生产，而中国更多地利用劳动生产。中国政府对粮食生产进行补贴，谁得到好处？为什么？湖北某县对粮食生产进行补贴？谁得到好处？为什么？汽油价格经常发生变化。在看到价格之前， A说，我要加 100元钱的汽油； B说，我要加 50升的汽油； C说，我把钱包里钱的三分之一用来买汽油。请问三个人对汽油的需求价格弹性各是多少。ContextChapter 3-Basics of MarketChapter 4-Application and Expansion of Market MechanismChapter 5-Demand Side of MarketChapter 6-7-Supply Side of MarketChapter 8-10-Market Structure: Firm Behavior under different Market Environments A Comprehensive Comparison of Market Structures(See 166-170 as reference)Market Numbers of firmsDegree of product differentiationEntry and exitIndependent or notIndustryPerfectCompetitionNumerous Homogeneous Free Yes Agriculture and FinancialMonopolistic CompetitionNumerous Differentiated Easy Yes ManufactureOligopoly A few DifferentiatedOrHomogeneousDifficult Yes/NO Heavy IndustryMonopoly Single Substantial BarriersYes Public UtilitiesMarket Structure ContinuumPureCompetitionPureMonopolyMonopolisticCompetition OligopolyPure Competition: Very Large Numbers Standardized Product “Price-Takers” Free Entry and ExitChapter 8 Firm Behavior in Competitive Markets1 What is a Competitive Market1.1 Properties A very large number of buyers and sellers No collusion among the firmsHomogeneous product (standardized)Free entry and exit (no barriers)Complete knowledge of all market information 1.2 Demand and RevenueProperties assumed above imply that: A competitive firm is a Price Taker instead of Price Maker.Reason for a price taker: Competitive firms cannot charge more than the market price of others, since their product is identical to all others.Assume the opposite P1 P2 But everyone knows this The products are homogeneous. So, no one buys from firm 1.Qfirms demand curved dMCPPrice taker leads to horizontal firm demand curveA Firms Demand Curve Is Perfectly Elastic at the Competitive PriceMarginal Revenue = Price: MR = PTotal revenue, TR, is PQ, where price is given. Therefore, marginal revenue, MR, is price, P. $131131131131131131131131131131131012345678910$ 0131262393524655786917104811791310$131131131131131131131131131131Product Price (P)(Average Revenue)TotalRevenue (TR)MarginalRevenue (MR)QuantityDemanded (Q)DEMAND AS SEEN BY APURELY COMPETITIVE SELLERSAC012345678910TP AFC AVC MR$100.0050.0033.3325.0020.0016.6714.2912.5011.1110.00$90.0085.0080.0075.0074.0075.0077.1481.2586.6793.00$190.00135.00113.33100.0094.0091.6791.4393.7597.78103.00- $100- 59- 8+ 53+ 124+ 185+ 236+ 277+ 298+ 299+ 280MARGINAL REVENUE-MARGINAL COST APPROACH$ 131131131131131131131131131131SMC$908070607080901101301502. Supply Decision to Maximize Profit General RuleMR = MCP = MC for competitive market, since P = MR Reason:v MR =MC - No more profit can be made by changing output.v M R MC - More profit can be made by increasing or decreasing profitMR MC -increase outputMR MC, and the firm could increase profits by expanding output.Situation P MC Production adjustment1 100 1202 100 803 100 100Profit maximization3. Behavior of Competitive Firms in Short RunSACSMCAVCPACSACSMCAVCP3.1 Any profit?Profit 0, if P SACProfit = 0 if P = SACProfit SACUnchanged if P = SACResult: No profit and no loss4. Market Supply: Supply Behavior in Competitive Industries4.1 Firm Supply and Market Supply (pp152)Summing all firms supply curves to get market supply.Condition: MR=P=MCIf PAC, there is excess profit ( economic profit0);If P=AC, there is normal profit ( economic profit is 0);If AVC P AC, there is a loss (economic profit is less than 0);If PAVC, loss, shut-down.4.2 Short-Run Equilibrium for a Competitive firm 4.3 Long-run Equilibrium for a Competitive Industry Rule: Zero economic profitP = AR= MR = MC = ACRecall: = TR TC 0, Entry 0, Exit = 0, no entry and no exit Why does a firm keep producing when it earns no profit?Normal profit is earned.Normal profit: the greatest amount that the firm can earn in other industries.4.4 Different Long-run Market Supply Curves Constant costs: horizontal Increasing costs: slope upward Fixed Supply: verticalWhy increasing costs might happen? First, resources may be scarce Second, different firms may have different costsIn this case, only marginal firm earn 0 profit. Consider two casesFirm： A B C D F G Case ICost： 300 300 300 300 300 300 Market supply curve： perfectly elasticCase IICost： 300 300 320 340 370 410 Market supply curve: slop upward to the right 5. Efficiency of Competitive Market(pp157)5.1 Criteria of EfficiencyPareto Efficiency (allocative efficiency)Condition for equilibrium:MU = MC, where utility is measured in dollar.5.2 Efficiency of Competitive Equilibrium demand side: P = MU, for each personsupply side: P = MC, for each firmwhen market is in equilibrium: MU = MC5.3 Quali