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4 Cards in this Set
- Front
- Back
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What five conditions define Perfect Competiton? |
1. Large number of buyers and sellers 2. Price-Taker -unable to influence the ruling market price 3. freedom of information - between firms 4. perfect knowledge - buyers and sellers have symmetric knowledge 5. Homogenous/Uniform product 6. No long-run barriers to entry or exit |
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Price Taker [Definition] |
A firm that has to accept the price ruling in the market |
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What do Supernormal Profits tell us? |
> signals entrepreneurs to allocate more factors, therefore allocating scarce resoirces to areas of nees > lack of competition in industry |
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Why do firms sell at the industry equilibrium under perfect competitive markets? |
Increase Price = No Sales Decrease Price = No Sense |
