ECON 1000 Chapter Notes - Chapter 12: Social Cost, Economic Equilibrium, Economic Surplus

• School: York University
• Department: Economics
• Course: ECON 1000
• Professor: Steven Edwards

Document Summary

Perfect competition: an extreme form of competition that firms face; the force of raw competition. Farming, fishing, wood pulping and paper milling, the manufacture of paper cups and shopping bags, grocery and fresh flower retailing, photo finishing, lawn services, plumbing, painting, dry cleaning, and laundry services are all examples of highly competitive industries. Perfect competition arises if the minimum efficient scale of a single producer is small relative to the market demand for the good and service. In this situation, there is room i(cid:374) the (cid:373)a(cid:396)ket fo(cid:396) (cid:373)a(cid:374)(cid:455) fi(cid:396)(cid:373)s. a fi(cid:396)(cid:373)"s (cid:373)i(cid:374)i(cid:373)u(cid:373) effi(cid:272)ie(cid:374)t s(cid:272)ale is the s(cid:373)allest output at which long-run average cost reaches its lowest level. In perfect competition, each firm p(cid:396)odu(cid:272)es a good that has (cid:374)o u(cid:374)i(cid:395)ue (cid:272)ha(cid:396)a(cid:272)te(cid:396)isti(cid:272)s, so (cid:272)o(cid:374)su(cid:373)e(cid:396)s do(cid:374)"t (cid:272)a(cid:396)e (cid:449)hi(cid:272)h fi(cid:396)(cid:373)"s good the(cid:455) (cid:271)u(cid:455). A price taker is a firm that cannot influence the market price because its production is an insignificant part of the total market.