Log in
HomeClass Notes1,200,000US530,000

ECON 202 Lecture Notes - Lecture 13: Perfect Competition, Marginal Revenue, Market Power

119 views4 pages
cerisegiraffe538
13 Jul 2015
School
Texas A&M University
Department
Economics
Course
ECON 202
Professor
Ajalavat Viriyavipart

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Econ 202: principles of microeconomics - lecture 13: firms in perfectly competitive. Economists categorize markets into four main structures based on three different characteristics: The number of firms in the industry. The similarity of the good or service produced by firms in the industry. The ease with which new firms can enter the industry. A perfectly competitive market, the first category, is characterized by these traits: There are many buyers and many firms, all of which are relatively small in relation to the market. There are no barriers to new firms entering the market. Firms in a perfectly competitive market are unable to control prices, and are unable to earn economic profits in the long run. The existence of many firms all selling the same good keeps an individual firm from affecting the price of that good. The actions of a single consumer or single firm have no effect on the market price.

Get access

Grade+
$40 USD/m
Billed monthly
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
10 Verified Answers
Class+
$30 USD/m
Billed monthly
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
7 Verified Answers

Related Documents

ECON 202 Lecture Notes - Lecture 16: Universal Rule, Takers, Average Cost
violetsquirrel937
ECON 202 Lecture Notes - Lecture 17: Monopolistic Competition, Latte, Starbucks
violetsquirrel937
ECON 202
Final Exam
Study Guide
ECON 202 Study Guide - Midterm Guide: Nash Equilibrium, Monopolistic Competition, Marginal Revenue
azureeagle339

Related Questions

What are the three conditions for a market to be perfectly competitive? For a market to be perfectly competitive, there must be:

A. many buyers and one seller, with the firm producing a product that has no close substitutes, and barriers to new firms entering the market.

B. many buyers and sellers, with firms selling similar but not identical products, with low barriers to new firms entering the market

C. many buyers and a few sellers, with all firms selling identical products, and no barriers to new firms entering the market.

D. many buyers and sellers, with all firms selling identical products, and no barriers to new firms entering the market.

E. many buyers and a small number of firms that compete, selling differentiated products, and barriers to new firms entering the market.

What conditions make a market perfectly competitive? A market is perfectly competitive if: 
 
(i) it has many buyers and one firm, which produces a product with no close substitutes, with barriers to new firms entering the market. 
(ii) it has many buyers and many sellers, all of whom are selling differentiated products, with no barriers to new firms entering the market. 
(iii) it has many buyers and a few sellers, all of whom are selling identical products, with no barriers to new firms entering the market. 
(iv) it has many buyers and a few sellers, all of whom are selling differentiated products, with barriers to new firms entering the market. 
(v) it has many buyers and many sellers, all of whom are selling identical products, with no barriers to new firms entering the market.

Describe an industry that would meet the conditions of a perfectly competitive industry which are

a) There are many buyers and sellers so neither side of the market has market power;

b) The product provided to the market is identical across suppliers; and

c) There are no barriers to entry.

How do individual firms in a perfectly competitive industry respond to an increase in the market demand for the product? Would advertising by individual firms in this type of market provide any benefits?