What are the conditions for a perfectly competitive market? What are some real-life examples of perfectly competitive markets? What are economic profit-maximizing strategies that may be made by a perfectly competitive firm? Identify a good that you regularly purchase and you feel is in perfect competition – how do the characteristics of the goods and the market structure it operates in affect the firm’s ability to change the price?
Following conditions for a perfectly competitive market:
The agricultural market is considered as analogous to the perfectly competitive market. Under the perfectly competitive market, profit is maximized where P = MC.
Wheat can be considered as the product of a perfectly competitive market. it is homogenous and sold by the many sellers. Thus, there is no use of making expenditure on the advertisement. Individual firms do not have control over the price.
What are the conditions for a perfectly competitive market? What are some real-life examples of perfectly...
1. For a perfectly competitive firm, long-run average cost is: LAC = 300 - 20Q + 1.8Q2, where Q denotes the firm’s output. The firm’s long-run profit-maximizing price is _____. 2. Demand for a good is given by: QD = 50 – 2P and supply by QS = 1P – 10, where P is the market price of the good. In equilibrium, price would be ___. 3. Demand for a good is given by: QD = 50 – 2P and...
In economic theory, imperfect competition is the competitive situation in any market where the conditions necessary for perfect competition are not satisfied. It is a market structure that does not meet the conditions of perfect competition; compare and contrast imperfect competition and perfect competition.
In economic theory, imperfect competition is the competitive situation in any market where the conditions necessary for perfect competition are not satisfied. It is a market structure that does not meet the conditions of perfect competition; compare and contrast imperfect competition and perfect competition.
Classify each market characteristic as being a trait of competitive markets, monopolistically competitive markets, or both market structures. Competitive Markets Monopolistically Competitive Markets Both Market Structures Answer Bank Differentiated goods Few, if any, barriers to entry No one buyer or seller can control prices Many buyers and sellers Identical/homogenous goods Match each example to the market structure it is most likely to belong to. Perfect (pure) competition Monopolistic competition Oligopoly Monopoly Answer Bank Carl's Taco Truck, one of many food...
(a) Why are firms operating under perfectly competitive market said to be a ‘price taker’? What impact does this have on the firm demand curve? (4 marks) (b) “Firm operating under perfect competition can only earn zero economic profit in the long run" Discuss this statement (6 marks)
(a) Why are firms operating under perfectly competitive market said to be a ‘price taker’? What impact does this have on the firm demand curve? (4 marks) (b) “Firm operating under perfect competition can only earn zero economic profit in the long run" Discuss this statement (6 marks)
Discuss the four characteristics of perfect competition demand curve of a perfectly competitive firm is horizontal? price? B) Want to lower your price? Explain why or why not. change when market price changes? Explain. 3. A. B.Explain which of the four characteristics is primarily responsible for the fact that the C. If you owned a firm in a perfectly competitive market would you: A) Want to raise your D.Draw the demand curve for a firm under perfect competition. Would the...
1) Suppose the second-hand market for concert tickets is perfectly competitive and there are primarily 10 online websites where consumers can buy tickets. The following describes the market demand for concerts and the cost of selling tickets. Market Demand: Q = 480 - 4p Cost to Firm: c(q) = 2.5q^2 + 100 Market Structure: Perfect Competition with N = 10 in the short run Market Equilibrium – Intersection of Market Demand and Market Supply e) How many tickets does each...
1. Provide an example of a perfectly competitive market, or at least a market that gets a close as possible in your opinion. Evaluate your market against the four characteristics of perfect competition (Many small buyers and sellers, identical products, complete information, free entry and exit) to explain why you think it fits this market structure. In your opinion, have the sellers in this market accepted their position as price-takers or do they continue to try to shift the market...
16. If firms in a monopolistically competitive market are earning positive profits, then a. firms will likely be subject to regulation. b. barriers to entry will be strengthened. c. some firms will exit the market. d. new firms will enter the market. 17. As new firms enter a monopolistically competitive market, profits of existing firms a. rise, and product diversity in the market decreases. b. decline, and product diversity in the market increases. c. rise, and product diversity in the...