MGEA02H3 Lecture Notes - Lecture 2: Invisible Hand, Market Power, Consumers Energy

• School: UTSC
• Department: Economics for Management Studies
• Course: MGEA02H3
• Professor: Jack Parkinson

Document Summary

A type of market a market structure . When there is considerable competition between a large number of producers who can supply the good to consumers. Perfect competition the main model for microeconomics. The dynamics of sr and lr adjustments to a shock how does equilibrium change in sr and lr. The welfare implications of perfect competition consumer surplus and producer surplus. Perfect competition: many buyers, many sellers (price takers, homogeneous good standardized (no brand loyalty, free entry and exit (no barriers to competition, perfect information (consumers do not make mistakes always find the lowest price) A good first approximation to how some real markets behave. The model is also a benchmark against which real world markets are measured and judged. Perfectly competitive markets are efficient and serve consumers well (give consumers power) Imagine the cost situation facing a typical business firm in a pc industry . It can"t change its cost curves (based on technology and prices of inputs)