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4 Cards in this Set
- Front
- Back
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What Is perfect Competition? |
1. There's a large number of buyers and sellers 2. Easy entry and exit 3. Homogeneous products (potatoes) 4. Perfect knowledge |
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The Demand curve for firms in perfectly Competitive markets |
The firm would be price takers as they can't influence the price in perfectly competitive markets thus PRICE=DEMAND=AVERAGE REVENUE=MARGINAL REVENUE |
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The Short Run |
Firms are profit maximizers and if there is abnormal profits being made, this will encourage other firms to enter this market. This pushes up supply and reduces price, this will continue until normal profits are being made |
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Unprofitable Production |
Unprofitable production means that firms will choose to leave and by this supply is decreased and price is being pushed up. It will continue until normal profits are being made. |
