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

Inverse demand function, Inverse Demand Function: If variable factor prices...

Inverse Demand Function: If variable factor prices changes, then the isocost line will tilt and consequently, the optimal factor requirement will be different. Suppose the wage rat

I am concerned that if we get into price war with Ev, I am concerned that i...

I am concerned that if we get into price war with Everest Solution

Price mechanism, how does the prices system affect a country

how does the prices system affect a country

Graph questions, explain what will happen to price , the marginal cost of r...

explain what will happen to price , the marginal cost of rice, and the quantity produced if the government sets a production quota of 2000 bags a week. draw a graph and explain you

Richrdian model, my assignment is about richardian model and wanna ask you ...

my assignment is about richardian model and wanna ask you about few questions

Law of demand, "price is becoming cheaper,yet the demand for car is not ris...

"price is becoming cheaper,yet the demand for car is not rising".does it mean law of demand is not operative?

Transactions demand for money, Transactions demand for money: Transact...

Transactions demand for money: Transactions demand for money represents cash balances held by economic agents in order to carry outordinary everyday transactions.For example,

Managerial economics, what is budget line?show the shift in the budget line...

what is budget line?show the shift in the budget line

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