Perfect competition by Monae Walker

mwalker324 — 2023-11-09 19:27:57 UTC

Has many buyers and sellers
All firms sell identical products
Buyers and sellers have identical information (no asymmetrical information)
There are no barriers to enter or exit the market
( If it doesn't have these four characteristics it is not a Perfectly Competitive Market)

mwalker324 — 2023-11-09 19:39:30 UTC

Because of the characteristics in a perfectly competitive market, sellers always end up being price takers.

Examples

mwalker324 — 2023-11-09 19:46:25 UTC

mwalker324 — 2023-11-10 03:25:18 UTC

It answers the questions:

How much product do we want to produce? By producing the quantity of output where marginal revenue equals marginal costs.

What price do we charge for our product? Because it is a price taker it has no say or choice in the matter.

mwalker324 — 2023-11-10 03:41:29 UTC

mwalker324 — 2023-11-10 04:05:10 UTC

Knowledge is easily shared between all participants in the market " My wheat has been affected by a new fertilizer"
No barriers, you can leave anytime you want. ( Want to stop being a farmer? you can!)
Many buyers and sellers are available (There is always someone willing to sell these items)

mwalker324 — 2023-11-10 04:08:03 UTC

No uniqueness (everyone gets the same exact thing)
Cannot sell above equilibrium price (price takers) ( if the price of corn at equilibrium price is $5, you cannot sell corn at $6)
Limited choices ( There are only so many products available that cannot be made or sold as something different. Not like coco-cola and pepsi.)

mwalker324 — 2023-11-10 04:23:43 UTC