What exam board are you? They seem V reasonable for Edexcel with about 80% being an A* in old spec and hopefully the same or even lower for new spec :)
@@realFriedrichHayek ya your dp looked like the one kept by an intellectual Ty for the quick reply. The books in my curriculum are very narrow,it's fun to study in depth.
Firstly, I'd like to thank you for making these videos - they're a great revision resource. Is there any chance you could do a video on fiscal rules and the effectiveness of them?
We should also take into consideration non Monterey costs incurred by firms, that total costs= monetary cost + opportunity cost, if opportunity cost is high then firms would tend to leave the market even if production at a point above the AVC curve.
Thank you very much your videos are really helpful I must admit I never understand my teacher I normally watch your videos and understand everything quickly and thank you again for helping me pass my exams I pass from u to a B now I hope to get an A thank you very much my teacher is impressed as he knows am doing really good in class now.
Thank you for being so committed to uploading because I find your videos incredibly useful. One question however (apologies if you answered this and I missed it) How is it possible that firms can have different AVC curves if all firms operate with perfect knowledge and technology? I would have assumed they'd all use the best capital and techniques and so would have the same curves?
*AVC are the variable costs that a firm has. In the short-run* (where firms are making SNP or losses in perfect competition),*firms may have employed more people as they can afford that. This would increase the money spent on wages. More firms enter the market because they see profits to be gained, the market price* (industry price - where supply = demand decreases. From an increase in supply) *decreases which means that some firms will have more a larger TVC than others. However, the assumption made is that firms that were in the market first were able to get to that point.* *Hope that helps :)*
Just wondering, but wouldn't u consider existence of fixed costs to be a barrier of entry/exit as they would be sunk costs especially if these fixed FOPs can't be moved. This would oppose the definition of perfect competition having no barriers of entry/exit
@@fariii7 well, not exactly, I'm not sure as to whether to ignore this contradiction between the model's idea of having no barriers of entry, and it's reality of it inevitably having ones in the form of fixed costs. Because as explained in my initial comment even in PCM there are fixed costs, which can work as a barrier of entry, also leading to sunk cost, which works as barrier of exit. It's one large point of critique for PCM's theory. But in general PCM is only hypothetical and in reality no market can ever be perfectly competitive. So I assume it's better to ignore this contradiction for a theory that is fully hypothetical to begin with. Hope this answered ur question in some ways. I'm not an expert on this topic tho so take what I said with a pinch of salt
Thanks alot. I m just confused in onething. If avc=ar then firm is covering its avc so why is it necessary for it to shutdown in that case? Please help
This makes sense but I thought firms couldn't leave a market in the short run because the definition of the short run is when there is at least one fixed factor of production and to leave a market means you have to change your factors of production right?
Don't get confused Aaron between definitions of Short Run (Costs) and Short Run (Market Structures). For market structures, time period is defined by the level of profit made
