The course contains four sections.
Section A defines market introducing its essential features. It also defines market structure and its different forms. The basic concepts of revenue and costs that are necessary to understand the operation of firms in different market structures are discussed in detail.
Section B works with basic postulates of Perfect Competition (PC) . The price taking role of firm under PC that makes it unique from firms in other market structure is discussed in detail. The concepts of total revenue (TR), average revenue (AR) and marginal revenue (MR) under PC is explained.
Section C focuses on the short-run equilibrium of PC firm. In this section, learners will also be able to know the production decision of a PC firm in the short-run. Firm's super normal profit situation, normal profit or break even situation, and the situation of loss will be examined with necessary illustrations.
Whether firm produces in the short-run facing loss or not is an important issue. Section D provides a detail when a firm under PC produces in the short-run and when it stops operation facing loss. It ends with the examination of lung run equilibrium of PC firm.
The course consists of 20 lectures and a total of 1 hour 40 minutes. It combines both mathematical and graphical contents where possible, so that one can learn alternative ways of interpreting the concepts.
The course is designed considering the desire of students of economics and business. But the contents are arranged in such a way that learners from other disciplines can easily go through the course.
Definition of Market with its essential features
Definition of market structure and its diƃerent forms
- Definition of TR, AR and MR
- How can we have AR from TR?
- How can we have MR from TR?
- Define Total Cost, Total Fixed Cost & Total Variable Cost
- Also show how we can have TC summing up TFC and TVC
- Define Average Cost, Average Fixed Cost and Average Variable Cost
- Also show the relative shape, position and relationship among them
Explain how the assumptions of large number of buyers and sellers and homogeneous product lead the firm to face a perfectly elastic demand curve. Students will get the answer of two important question-
1. Why is a PC firm said to be price taker?
2. Why is the demand curve faced by firm under PC is horizontal/ perfectly elastic?
Offers a detail explanation of the rest of the assumptions
Derive AR and MR from TR and show that it is nothing but the price (P) for PC
It uses total revenue and total cost method to explain the short-run equilibrium of PC firm.
Introduces three possible situations that a PC firm can face in the short-run at equilibrium-
1. Super normal profit situation
2. Normal profit or break-even situation
3. The situation of loss
Explains the case of super normal profit when the firm is in equilibrium in the short-run
Explains when firm reaches to break even situation and earns only normal profit
Explains the situation of loss of a PC firm at equilibrium in the short run
Explains all the possible situations that a PC firm confronts when there is loss at equilibrium using a simple table.
Explains when a firm produces facing loss.
It explains the shut-down situation of a PC firm facing loss in the short-run
Explains the situation when a firm stops its operation when there is loss in the short-run.
Illustrates the long-run equilibrium of PC firm
I am a practicing academician of Economics at IIUC and currently working as a fellow of the Scientific and Technological Research Council of Turkey (TUBITAK). I have more than 10 years of teaching experiences both at undergraduate (BBA) and post graduate (MBA) levels. I am extremely passionate in teaching and thus here to share my teaching experiences with students worldwide.