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安康翻译公司关键字：Suppose the initial state of the market in the supply and demand equilibrium, there is excess capacity, that is, all enterprises in the industry at least zero economic profit. At this time, the product of supply and demand curves intersect at O0 points, then equilibrium price P0, then all firms within the industry at least the minimum average cost is not higher than P0 (Figure 1). Figure 1, P represents the price, Y is the industry's largest production capacity, S is the product supply curve, D represent the product demand curve, AC on behalf of corporate average cost, Q on behalf of corporate production.It can be seen, due to differences in cost of doing business within the industry, the average cost is lower than P0 corporate existence of excess profits. Enterprises in pursuit of greater profits, while the average cost is lower than P0 will continue to expand their own internal corporate production scale, on the other hand, have the ability to make the average cost is lower than P0 external companies will continue to enter the industry, thus total production capacity to promote the industry supply curve S0 Y0 and the right respectively, and S1 at Y1. Capacity and supply curve to the right to market supply and demand in O1 to reach a new equilibrium point, then down to the equilibrium price from P0 P1, and the original company, the minimum average cost is higher than P1, companies began operating losses, will sign the emergence of the industry overcapacity. As the loss of business reason, then the market will opt out, because loss-making enterprises out, again to reduce industry capacity, production capacity and supply curves shift to the left back, then equilibrium prices rise again, the cost is relatively low profitability of loss-making enterprises start again , results of the market will reach a new equilibrium point O2, then the price has increased from P1 to P2, if the increase in production capacity greater than out of production capacity, then the P2 as the preferences of profit maximization and competition, industries and enterprises will continue to take measures to reduce costs in order to obtain higher profits and are not peer out of position, then the industry cost of doing business there will always be differences between high and low, but lower than the equilibrium price of the company will continue to expand production capacity, high cost of business will continue to be eliminated, the market price will continue to decline, the market will be measured are growing.This can draw the following conclusions: to meet the assumptions of the ideal market environment, the purpose of maximizing profits by driving the short term, industry overcapacity, inevitable; but excess capacity - the market equilibrium - excess capacity longer - the market re-balancing process will automatically cycle, whereas this process is the result of declining market prices, continued low-cost alternative to high-cost business enterprise, social resources, thus more effective use. If you do not take into account the cost adjustment process, the process will undoubtedly be beneficial to increase social welfare, however, the reality is often different from the market the ideal market model, changes in industry capacity situation can not be strictly in accordance with the laws of change: short-term, sustained a certain period of industry overcapacity will lead to industry product prices, business efficiency decline, workers increased unemployment and other consequences to the economy and society loss; the long term, industry overcapacity, and may even make the industry's corporate structure in the opposite direction of the transformation, leading to poor economic consequences, resulting in lower social welfare. Here are a few models do not meet the reality of the situation analysis:
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