ECON101 Lecture Notes - Lecture 12: Perfect Competition, Market Power, Marginal Revenue

• School: University of Waterloo
• Department: Economics
• Course: ECON101
• Professor: wokiakumase

Document Summary

Perfect market is a market in which o o o o. Many firms sell identical products to many buyers. There are no restrictions on entry into the market. Established firms have no advantage over new ones. Sellers and buyers are well informed about prices. Minimum efficient scale of a single product is small relative to the demand for the good or service. Minimum efficient scale is the smallest output at which long-run average cost reaches its lowest level o o. There is room in the market for many firms. Free entry anyone can enter or exit the market at any time. Each firm produces a good that has no unique characteristics. Consumers don"t care which firm"s good they buy. Firms in a perfect market are price takers o. Price taker a firm that can not influence the market price because its production is an insignificant part of the total market.