by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is a Natural Monopoly? Economies of scale can combine with the size of the market to limit competition. This arises when the market has room for only one producer. If a second firm attempts to enter the market at a smaller size then its average costs will be...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Productive and Allocative Efficiency in Perfectly Competitive Markets? When profit-maximizing firms in perfectly competitive markets combine with utility-maximizing consumers, something remarkable happens: the resulting quantities of outputs of goods and...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Long-Run Equilibrium in a Perfectly Competitive Market? No perfectly competitive firm acting alone can affect the market price. However, the combination of many firms entering or exiting the market will affect overall supply in the market. In turn, a shift...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What Guides Decisions to Enter or Exit a Market in the Long Run? It is impossible to precisely define the line between the short run and the long run with a stopwatch, or even with a calendar. It varies according to the specific business. Therefore, the distinction...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What do Marginal Costs and the Supply Curve look like for a Perfectively Competitive Firm? For a perfectly competitive firm, the marginal cost curve is identical to the firm’s supply curve starting from the minimum point on the average variable cost curve. To...
