ECON1131 Chapter Notes - Chapter 12: Marginal Revenue, Perfect Competition, Profit Maximization
Document Summary
Chapter twelve: perfect competition and the supply curve. Price-taking producers: its actions cannot affect the market price of the good or service it sells: considers the market price as given. Price-taking consumer: a consumer who cannot influence the market price of the good or service by his or her actions: market price is unaffected by how much or how little of the good the consumer buys. Perfectly competitive market: a marker in which all market participants are price takers. Perfectly competitive industry: an industry which producers are price takers. It is easy for new firms to enter the industry or for firms that are currently in the industry to leave. No obstacles in the form of government regulations or limited access to key resources prevent new producers from entering the market. Free entry and exit: when new producers can easily enter into an industry and existing producers can easily leave that industry.