Question
Step 1 Read the following scenario: Imagine a market where there is perfect competition between two or more companies, such as a fish market where
Step 1
Read the following scenario:
Imagine a market where there is perfect competition between two or more companies, such as a fish market where vendors offer the same products at the same price or online ticket auctions like StubHub. In this market there are four key elements to perfect competition:
- a large number of buyers and sellers
- no barriers to entry or exit
- perfect mobility for customers choosing products
- homogenous products
Step 2
Answer Questions:
- Explain how output, price, and profit are determined in your perfectly competitive market in the long run.
- How does that lead to efficiency?
- How could changes in technology affect the market?
- How could an increase in demand affect the market?
- What are the effects of new businesses entering the market?
- What are the effects of businesses leaving the market?
Step by Step Solution
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Step: 1
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Microeconomics Principles, Problems and Policies
Authors: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn
20th edition
978-0077660819, 77660811, 978-1259450242
