第0页共18页编号：时间：2021年x月x日书山有路勤为径，学海无涯苦作舟页码：第0页共18页CHAPTER8PROFITMAXIMIZATIONANDCOMPETITIVESUPPLYTEACHINGNOTESThischapteridentifiesthebehavioralincentivesoftheprofit-maximizingfirmandthenexplorestheinteractionofthesefirmsinacompetitivemarket.Eachsectionofthechapterisimportantandbuildsasolidunderstandingofthesupplysideofthecompetitivemarket.ItisnecessarytobuildthisfoundationbeforemovingontothechaptersinpartIIIofthetext.Whilethematerialinthechapteriswritteninaveryclear,easytounderstandmanner,studentsstillstrugglewithmanyoftheconceptsrelatedtohowthefirmshouldchoosetheoptimalquantitytoproduce,andhowtoapplythecostcurvediagramlearnedinthepreviouschapter.Oneoptionforlectureistospendtimeworkingwithatablesimilartotheoneusedintheexercisesattheendofthechapter.Workingthroughmanyexampleswiththistypeofatablecanhelpthestudentsunderstandthedifferenttypesofcost,aswellasthefirm’soptimallevelofproduction.Section8.1identifiesthethreebasicassumptionsofperfectcompetitionandsection8.2discussestheassumptionofprofitmaximizationasthegoalofthefirm.Bothsectionsareimportantinbuildingthefoundationforderivingthefirm’ssupplycurve,whichisdoneinsections8.3to8.5.Section8.3derivesthegeneralresultthatthefirmshouldproducewheremarginalrevenueisequaltomarginalcost.Thesectionthengoesontoidentifyperfectcompetitionasaspecialcasewherepriceisequaltomarginalrevenue,whichfollowsdirectlyfromtheassumptionofpricetakerbehaviorinsection8.1.Ifyourstudentshavehadcalculus,itishelpfultoderivethemarginalrevenueequalsmarginalcostrulebydifferentiatingtheprofitfunctionwithrespecttoq.Ifyourstudentshavenothadcalculusthenitishelpfultodosomemoreworkwiththedatatablessotheyunderstandthatprofitismaximizedwhenmarginalrevenueequalsmarginalcost.Emphasizethattheperfectlycompetitivefirmchoosesquantityandnotpriceinordertomaximizeprofit.Toputperfectcompetitioninperspective,itcanalsobehelpfultogiveabriefoverviewofmonopoly,oligopoly,andmonopolisticcompetitionbeforepresentingtheassumptionsofperfectcompetition.Restrictthisdiscussiontoidentifyinghowmanyfirmsareintheindustry,iftherearebarrierstoentry,productdifferentiation,andwhatassumptionsdoeseachfirmmakeabouthowtheotherfirmsintheindustrywillreacttotheirpriceandquantitydecisions.Thiswillstimulatethestudent’sinterestaboutupcominglectures.Sections8.4and8.5furtherexplorethefirm’sdecisiontoproducewherepriceisequaltomarginalcost,andshowthatthefirm’ssupplycurveisitsmarginalcostcurveaboveitsaveragevariablecostcurve.Althoughsomestudentswillunderstandreferencestosecond-orderconditions,expecttobeaskedwhyq0inFigure8.3isnotprofitmaximizing,althoughMR=MC.Twoadditionalpointswarrantcarefulexplanation:1)whythefirmwouldremaininbusinessifthefirmsustainsalossintheshortrun,and2)thatmaximizingprofitisthesameasminimizingloss.Althoughthesummationoffirmsupplycurvesintoamarketsupplycurveisstraightforward,theanalysisoflong-runcompetitiveequilibriumisdifficult.Difficultconceptsinclude:*whyitmaybeoptimalforthefirmtoincurlossesintheshortrunbutnotthelongrun.*whyfreeentryandexitwillreduceeconomicprofittozerointhelongrun.*whypriceisequaltominimumaveragecostinthelongrun.Itcanbehelpfultopresentanexample,algebraicandgraphical,whichstartsoutwithonlyonefirmintheindustrythatisearningpositiveeconomicprofit,andthenshowhowthemarketwillconvergeonitslongrunequilibriumpoint.Explorechangesinprice,quantity...
