Book contents
- Frontmatter
- Contents
- Preface
- How to use this book
- List of online perspectives
- List of further readings online
- List of online video modules
- Book I The market economy, overview and application
- Book II Demand and production theory
- Book III Competitive and monopoly market structures
- 9 Firm production under idealized competitive conditions
- 10 Monopoly power and firm pricing decisions
- 11 Firm strategy under imperfectly competitive market conditions
- 12 Competitive and monopsonistic labor markets
- References
- Index
9 - Firm production under idealized competitive conditions
from Book III - Competitive and monopoly market structures
- Frontmatter
- Contents
- Preface
- How to use this book
- List of online perspectives
- List of further readings online
- List of online video modules
- Book I The market economy, overview and application
- Book II Demand and production theory
- Book III Competitive and monopoly market structures
- 9 Firm production under idealized competitive conditions
- 10 Monopoly power and firm pricing decisions
- 11 Firm strategy under imperfectly competitive market conditions
- 12 Competitive and monopsonistic labor markets
- References
- Index
Summary
Economists understand by the term market, not any particular market place in which things are bought and sold, but the whole of any region in which buyers and sellers are in such free intercourse with one another that the prices of the same goods tend to equality, easily and quickly.
Augustin CournotChapters 6 through 8 largely dealt separately with the two sides of markets – consumers and producers. We devised graphic means of representing consumer preferences (the demand curve) and producer costs (the average and marginal cost curves). This chapter brings demand and cost analysis together in a way that allows us to examine how individual firms react to consumer demand in competitive markets. Our focus is on a highly competitive market structure. We investigate an intriguing question: at the maximum, how much can competitive markets contribute to consumer welfare?
We do not attempt to give a full description of a real-world competitive market setting. Markets are too diverse for such a description to be very useful. Rather, our aim is to devise a theoretical framework that can enable us to think about how competitive markets work in general, as a constructive behavioral force. Although our model cannot tell much that is specific about real-world markets, it provides a basis for predicting the general direction of changes in market prices and output.
- Type
- Chapter
- Information
- Microeconomics for MBAsThe Economic Way of Thinking for Managers, pp. 329 - 366Publisher: Cambridge University PressPrint publication year: 2010