Perfectly competitive market, Microeconomics

Perfectly Competitive Markets

* Characteristics of Perfectly Competitive Markets

 1. Price taking

 2. Product homogeneity

 3. Free entry and exit

* Price Taking

- The individual firm sells a small share of total market output and, thus, cannot influence the market price.

- The individual consumer buys too small share of industry output to have any impact on market price.

* Product Homogeneity

- The products of all the firms are perfect substitutes.

- Examples

  • Agricultural products, copper, oil, iron, lumber

* Free Entry and Exit

- Buyers can switch easily from one supplier to another.

- Suppliers can enter easily or exit a market.

- Possibility of other objectives

1) Revenue maximization

2) Dividend maximization

4) Short-run profit maximization

- Implications of nonprofit objective

  • Over long run investors would not support company
  • Without profits, survival unlikely

- Long run profit maximization is valid and does not exclude possibility of altruistic behavior. 

Posted Date: 10/12/2012 5:11:43 AM | Location : United States







Related Discussions:- Perfectly competitive market, Assignment Help, Ask Question on Perfectly competitive market, Get Answer, Expert's Help, Perfectly competitive market Discussions

Write discussion on Perfectly competitive market
Your posts are moderated
Related Questions
illustrate and explain the changing demand gor big Mac using the indifference curves and budget line

what are the uses of cross elasticity quantity in demand/

explain the relationship between scarcity,choice and opportunity cost

Working of IFC: The IBRD loans are available only to member-country governments or with the guarantee of member-country governments. Further, IBRD can only make a loan but it

Why is high unemployment considered a bad thing? High unemployment means that a nation's resources are underutilized.  It also poses great psychological, economic, and social c

Interest: A lender charges interest as the price of lending money (or some other asset) to a borrower. Interest is mainly charged as a specified percentage of the loan's value, per

Calculate the number of moles in 15.8 grams of aluminum hydroxide

Labour Supply:Total number of workers available and willing to work in a paid position; generally measured by the labour force(even though the labour force usually excludes many wo

You have just been hired by your city’s department of health. Your first task is to use cost-benefit analysis to evaluate a smocking awareness program that the department has been