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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

Consider Figure 23-5, and suppose that the price per unit corresponding to the position of d1 is at $4.50 per unit and that the quantity at point E1 is exactly 7 units per hour. Calculate total revenues, total costs, and economic profits at point E1 and explain why it is called the short-run break-even point.

Consider the information provided in Problem 23-4. Suppose the market price drops to only $5 per pizza. In the short run, should this pizza shop continue to make pizzas, or will it maximize its economic profits (that is, minimize its economic loss) by shutting down?

In several markets for digital devices that can be viewed as perfectly competitive, steady increases in demand for the required minerals ultimately have generated long-run reductions in the market prices of these devices. Describe in words the types of adjustments that must have occurred in these markets to have brought about this outcome, and evaluate whether such digital-device industries are increasing, constant, or decreasing-cost industries.

Take a look at Figure 23-3. This figure uses the data in the table from Figure 23-2, which indicates that the area of the blue rectangle displaying hourly economic profits is $5 per period. What prevents this firm from continuing to produce the same number of units per hour but raising the price that it charges for each unit in order to enlarge the area of the profit rectangle?

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?
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