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Chapter 23: Q. 23.1LO (page 510)

Identify the characteristics of a perfectly competitive market structure

Short Answer

Expert verified

It's no control over market supply and value. In the other circumstances, a difference for one company's current provision cannot result in a large rise in output availability.

Step by step solution

01

Ste[p 1: Introduction

There's an overwhelming buyers and sellers of a resource in competitive equilibrium. The numbers of buyers are such a lot of that one buyer buys a awfully small a part of the market supply. Similarly, one seller supplies a really small a part of the entire output. As a corollary, the sizes of a strong firm shrink in relationship towards the market in which it operates.

02

Given Information

All the sellers in a very perfectly competitive market supply a similar product. In all other respects, many of the competitive businesses' items are equal.

03

Explanation

As there are so many vendors providing a similar model, any corporation only offers a limited or unimportant chunk of the market. For this reason, it's no control over market supply and value. In these other terms, a difference with one company's business production cannot result in a huge growth in net availability. As both a reason, it will be unable to affect valuation by its own acts.

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Most popular questions from this chapter

Why might firms that hire mostly untrustworthy people struggle to provide as much output in a competitive market as firms that attract and retain mostly honest individuals?

The minimum feasible long-run average cost for firms in a perfectly competitive industry is $40per unit. If every firm in the industry currently is producing an output consistent with a long-run equilibrium, what is the marginal cost incurred by each firm? What is the market price?

Suppose that the firm with the costs and revenues tabulated in Figure 23-2 is contemplating whether to produce 12 units of output. If it were to produce this many units, what (if anything) would happen to the market price? What would be the firm's marginal revenue for the 12th unit produced? What would be the firm's total revenues per hour?

Why might daily variations in the market clearing price of recycled plastic induce some firms to call in their workers and pay them wages for their labor services on some days but tell them to stay home on others?

Yesterday, a perfectly competitive producer of construction bricks manufactured and sold10,000 bricks per week at a market price that was just equal to the minimum average variable cost of producing each brick. Today, all the firm's costs are the same. but the market price of bricks has declined.

a. Assuming that this firm has positive fixed costs, did the firm earn economic profits, economic losses, or zero economic profits yesterday?

b. To maximize economic profits today, how many bricks should this firm produce today?
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