BUSS1040 Lecture Notes - Lecture 4: Market Power, Sunk Costs, Fixed Cost

• School: University of Sydney
• Department: Business Studies
• Course: BUSS1040
• Professor: Dr Katrien Stevens

Document Summary

Many buyers and sellers all buyers and sellers are a very small party of the market. Homogenous product consumers are indifferent as to who they prhcase from all firms have access to the same technology. Price takers no individual buyer or seller has sufficient market power to influence market prices that is, every participant is a price taker. Free entry and exit firms can freely (that is, without cost) enter and exit the market in the long run. There are no barrers to entry in the long run. Short run (sr: each firms plant size is given, this is because some inputs cannot be alterted (fixed inputs, the number of firms in the industry is fixed. Long run (lr: each firm can change the size of its plant, all inputs can be varied, firms can enter (and exit) the industry, thus the number of firms is variable.