Microeconomics Module 5 Study Guide Notes It is recommended that your print and fill this study guide out as you work through each lesson. You will have an Assessment assignment that is due at the end of the module. The assessment is directly built from this study guide. In addition, each Module Study Guide can be used to prepare for the mid-term and final. IN THIS MODULE, STUDENTS SHOULD DEMONSTRATE AN UNDERSTANDING OF: MODULE 5 Lemon. .Me - Donpubs purfect compailica, monopoly, inropelads campallden. and oligopoly Lemor. 6.14 - Daniel Theory Every firm shares two things with all other firms. They must answer the same questions and every firm operates in = certain market structure. Each firm must answer the following questions: 1. What price should the firm charge for the product it produces and/or sells? 2. How many units of the good should the firm produce? 3. How much resource does the firm need in order to produce their goods? Firms will operate in one of 4 market structures. A is a firm's environment or setting whose characteristics influence the firm's pricing and output decisions. These include: 1. Perfect competition 2. Monopoly 3. Monopolistic Competition 4. Oligopoly This module will explore all four market structures. You should be able to identify what market structure a firm is in and how they go about answering the questions above. Perfect Competition Lesson 5.1 Theory of Perfect Competition 1. The theory of perfect competition is built on four assumptions: a. There are many and none of which is large in relation to total sales or purchases. b. Each firm produces a sells a _ product. C. Buyers and sellers have all relevant information regarding product entry into and exit out of the industry. 2. A is a seller that does not have the ability to control the price of the product it sells; the seller "takes" the price determined by the market. This occurs because if a firm raises it's prices, consumers will purchase the good from another seller because all products homogeneous. Therefore, firms must charge the price the market will allow and cannot raise or lower prices. Revised: 07/22/2020