ECON 1013 Lecture Notes - Lecture 4: Perfect Competition, Economic Surplus, Demand Curve
4 Nov 2016
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Document Summary
Characteristics of a perfectly competitive market a market is perfectly competitive if it satis es the following four conditions: The market deals in a homogenous well de ned product (cant deal with two products at the same time) Market participants or traders have access to full info about the opportunities the products available and about their going prices. There is a free entry and exit. There is a large number of buyers and sellers (if this is large then this^ is little) Two interpretations of demand curve: the demand curve as a plan, the demand curve as a willingness to pay curve. Willingness to pay/demand curve is also known as the marginal bene t. Consumer surplus is the maximum total amount that consumers are willing to pay but they don"t actually pau to acquire a certain quantity of a product. To determine the net bene t nd the area of the triangle on the plot graph.
