12-07-2012, 01:15 PM
PERFECT COMPETITION
PERFECT COMPETITION.pptx (Size: 130.47 KB / Downloads: 25)
SHUT-DOWN POINT
IN THE SHORT-RUN A MONOPOLY FIRM CAN NOT COVER ITS TOTAL COST
i.e. ITS TOTAL COST IS GREATER THAN TR, IT HAS TWO OPTIONS;
1] TO SHUT-DOWN THE FIRM IMMEDIATELY.
2] TO CONTINUE TO CARRY ON ITS BUSINESS EVEN AT LOSS AND WIND-UP
THE BUSINESS AND QUIT THE INDUSTRY IN THE LONG-RUN.
RESERVE PRICE IS THE MINIMUM PRICE THAT FIRMS ANTICIPATE. IF THE ACTUAL PRICE IS EQUAL TO OR LESS THAN THE RESERVE PRICE FIRMS REFUSE TO SUPPLY THE OUTPUT i.e. SUPPLY IS ZERO.