Perfectly competitive market, Microeconomics

Assignment Help:

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. 


Related Discussions:- Perfectly competitive market

Name the five types of capital, Name the five types of capital. The fiv...

Name the five types of capital. The five types of capital are:  natural capital, manufactured capital, human capital, social capital and financial capital.

Elasticity of demand, "Assume the local fixed telecommunications company is...

"Assume the local fixed telecommunications company is a monopoly. It costs the company €2 per month to give voice messages service to a customer. Elasticity of demand for voice mes

Common property resource management, Normal 0 false false f...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Current account - balance of payments, Current Account: The Current Ac...

Current Account: The Current Account can be broken down into two parts, viz., one, balance of trade, and, two, balance on invisibles. The Balance of Trade (BOT) deals only wit

Briefly explain the main macroeconomic objectives, Briefly explain the main...

Briefly explain the main macroeconomic objectives of governments. Definition of macroeconomic issues Growth a)      Enhance in national income per unit of time, a

Past tense poem of a chemical element, Which element of the periodic table ...

Which element of the periodic table has the most characteristics and is used in everyday life?

Taxing system, On what kind of income is our taxing system based?

On what kind of income is our taxing system based?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd