- Pennsylvania State University - All Campuses
- Economics 002
- chpater 8
Last Modified: 2011-07-04
- What does market structure refer to
- Think about two markets: the telecommunication market and the agricultural market. In the...
- What market structures do economists often discuss
- Before we start, please keep in mind that the four market structures are just theoretical...
- 2.The Theory of Perfect Competition
- Note: Perfect competition never exists in the real world....
- In perfect competition, are there few or many buyers and...
- In perfect competition, are goods homogeneous or...
- Do buyers and sellers have perfect or imperfect...
- Can firms enter the market freely, as long as they are...
- Which of the following is not an assumption of the theory...
- There are many sellers and many buyers, none of which is...
- Each firm produces and sells a differentiated product.
- Buyers and sellers have all relevant information with respect to prices, product quality, and sources
- There is easy entry and exit.
- In the theory of perfect competition,
- sellers of the product are not influenced by other sellers and therefore have virtually complete
- buyers and sellers of the product know everything that there is to know about the product.
- it can be quite expensive for a firm to enter this type of market, but once the firm is established, it
- 2.2.The Demand Curve for a Perfectly Competitive Firm Is Horizontal
- This section explains why the demand curve of an individual firm is horizontal. If you find the explanation in
- We can also use the concept of demand elasticity to understand why the demand curve of an individual firm is horizontal.
- Recall that the more substitutes there are for a good, the higher the price elasticity of demand. In perfect
- Recall that a perfectly elastic demand curve is horizontal (Page 118, Exhibit...
- If the demand curve is horizontal, does the firm need to drop its price to...
- Where does the demand curve of an individual firm intersect with the vertical axis
- The market price is 10. Draw the demand curve of an individual firm.
- Recapture the reasons why a firm does not want to deviate from the market price.
- Read Finding ECONOMIS: When Selling Shares of Stock. The market price of stock...
- 2.3.The Marginal Revenue
- The market price of a good is 10. What is a firms revenue when it supplies 10 units? What is the total revenue when it suppliers 11 units? Find the marginal revenue of the 11th unit of product.
- What is the marginal revenue of a perfectly competitive firm equal to
- Isnt it true that '='' for any firms, regardless of the market structure
- 2.4.Theory and Real-World Markets
- What markets are usually cited as example of...
- When can we use the theory of perfect...
- Real-world markets that approximate the four...
- some agricultural markets.
- the soft drink market.
- the stock market.
- a and c
- a, b, and c
- Does a real-world market have to meet all the...
- Which of the following is probably the worst real-world example of a perfectly competitive market
- the market for corn
- the market for automobiles
- the stock market
- the market for wheat
- Which of the following statements is false
- The perfectly competitive firm's demand curve is horizontal at the market price.
- The theory of perfect competition is completely and accurately descriptive of most real-world
- Which of the following is the best example of a homogeneous good
- new cars
- ice cream
- 3.Perfect Competition in the Short Run
- 3.1.Output Level: Maximizing the Variable Profit
- In this section, we assume that a firm has already paid the fixed...
- What notation/concept do we use to denote the extra cost incurred...
- If MCMR, shall the firm produce that unit of product? What if MCMR
- At which output level will a firm settle (i.e., when is the...
- Use MC and MR curves to illustrate the determination of optima
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