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FACTOR DEMAND AND MARGINAL REVENUE PRODUCT: For a firm that hires the services of a factor in a perfectly competitive factor market, the factor demand curve is that portion of the marginal revenue product curve that lies below the average revenue product curve. The relation between marginal revenue product and factor demand for a perfectly competitive firm is comparable to the relation between marginal cost and short-run supply. A perfectly competitive firm maximizes profit by hiring the quantity of a factor that equates factor price and marginal revenue product. As such, the firm moves along it's marginal revenue product curve in response to alternative factor prices.
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PERFECT COMPETITION, LONG-RUN PRODUCTION ANALYSIS In the long run, a perfectly competitive firm adjusts plant size, or the quantity of capital, to maximize long-run profit. In addition, the entry and exit of firms into and out of a perfectly competitive market guarantees that each perfectly competitive firm earns nothing more or less than a normal profit. As a perfectly competitive industry reacts to changes in demand, it traces out positive, negative, or horizontal long-run supply curve due to increasing, decreasing, or constant cost.
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BLACK DISMALAPOD
[What's This?]
Today, you are likely to spend a great deal of time looking for the new strip mall out on the highway trying to buy either a birthday greeting card for your uncle or a T-shirt commemorating the 2000 Presidential election. Be on the lookout for door-to-door salesmen.
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This isn't me! What am I?
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Ragnar Frisch and Jan Tinbergen were the 1st Nobel Prize winners in Economics in 1969.
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"Recipe for success. Study while others are sleeping; work while others are loafing, prepare while others are playing, and dream while others are wishing." -- William A. Ward
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USM
Unlisted Securities Market
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