Economic Characteristics Of Egyptian Agriculture PDF

ECONOMIC CHARACTERISTICS OF THE EGYPTIAN AGRICULTURE (B109) Dr. Momtaz Nagy Elsebaei Professor of Agricultural Economics and Marketing - Department of Agricultural Economics - Faculty of Agriculture - Ain Shams University  Chapter Four: AGRICULTURE IS A COMPETITIVE INDUSTRY: Perf...

ECONOMIC CHARACTERISTICS OF THE EGYPTIAN AGRICULTURE (B109) Dr. Momtaz Nagy Elsebaei Professor of Agricultural Economics and Marketing - Department of Agricultural Economics - Faculty of Agriculture - Ain Shams University  Chapter Four: AGRICULTURE IS A COMPETITIVE INDUSTRY: Perfect Competition Market: 1)many buyers and many sellers. so that the actions of an individual cannot affect the price of the commodity. 2)Agricultural products are almost homogeneous. 3)free entry and exit. 4)Mobility of resources between agricultural crops. 5)the market have perfect knowledge of present and future prices and costs. In a perfectly competitive market, firms are price- takers.  (MONOPOLY Market) ❑many buyers and a single seller ❑unique product ❑entry is impossible In a MONOPOLY market, firms are price- makers.  supply curve: ❑Short run supply curve of a perfectly competitive firm is that portion of marginal cost curve which is above average variable cost curve., “The short run supply curve of a firm in perfect competition is precisely its Marginal Cost Curve for all rates of output equal to or greater than the rate of output associated with minimum average variable cost.” Supply Curve:  Supply Curve: Thus Long Run Supply Curve of a firm is that portion of its marginal cost curve that lies above the minimum point of the average cost curve. ✓ The total revenue for a firm in a perfectly competitive market is the product of price and quantity (TR = P * Q). ✓ The average revenue is calculated by dividing total revenue by quantity. ✓ Marginal revenue is calculated by dividing the change in total revenue by change in quantity. ✓ Marginal revenue is the change in total revenue that results from a one-unit increase in the quantity sold. ✓ Marginal cost The increase or decrease in the total cost of a production run for making one additional unit of an element. ✓ A firm in a competitive market tries to maximize profits. In the short-run, it is possible for a firm’s economic profits to be positive, negative, or zero. Economic profits will be zero in the long-run. ✓ In the short-run, if a firm has a negative economic profit, it should continue to operate if its price exceeds its average variable cost. It should shut down if its price is below its average variable cost. ✓ ✓economic profit: The difference between the total revenue received by the firm from its sales and the total opportunity costs of all the resources used by the firm. ✓ Equilibrium in competitive market:  maximum profits : The firm gets maximum profits only when: MR = MC =P an individual firm: for industry: market equilibrium:  market equilibrium: the market equilibrium when: Demand = Supply Up normal profit: market equilibrium:  market equilibrium: Exercise1: Determine the price and quantity of equilibrium in the market? When the price = 2, Note the shortage = 4 units When the price = 5, Note that surplus=8  Total Revenue: Marginal revenue = (Change in total revenue)/(change in quantity) TR = P * Q Marginal cost = (Change in total cost)/(change in quantity) Total Revenue: Exercise3:Using the data in the table below, determine the price and quantity at the equilibrium position : Thank you