Study sets, textbooks, questions
Upgrade to remove ads
Krystal Econ Final New Material
Terms in this set (11)
all the characteristics of a market that influence the behavior of buyers and sellers when they come together to trade
Three basic questions to ask in determining a market structure:
1. How many buyers and sellers are in the market?2. Is the product differentiated or is it the same across all sellers?
3. are there any barriers to entry?
is a market structure characterized by a large # of buyers and sellers, of an identical (homogeneous product, and with no barriers to entry
Examples of Perfect Competition
COMMODITIES: such as wheat, corn, apples, oranges, etc.
What are the numbers of firms in the Perfect Competition market structure?
since there are no barriers to entry, there are many firms in this market structure
What is the impact on price by firm in perfect competition?
SInce there is homogeneous product and no barriers to entry, all firms are price-takers i.e have horizontal firm-level demand curves, which are determined by market forces i.e supply and demand of the industry
Profits in Perfect Competition
Economic Profits are possible only in short-run, since there are lots of competitors & no barriers to entry
The industry supply curve is the horizontal...
summation of all of the individual firm's supply curves
In the long run, every competitive firm will earn...
normal profit-that is, 0 economic profit
At each competitive firm in long-run equilibrium P=MC=
minimum ATC=minimum LRATC
In sum, Technological Innovation Application
-the technological innovation shifted down the firm's ATC curve
-this causes short-run economic profits to occur
-seeing this, other firms enter the mareket, which increases the industry supply curve
-this results in a lower equilibrium price, and higher equilibrium quantiity
Sets with similar terms
Price exam 3
AP Microeconomics--Perfect Competition
Other sets by this creator
Krystal Econ Monopoly
Krystal Econ Oligopoly
Krystal Econ Final Monopolistically Competitive Ma…