COMMERCE 1BA3 Final: Microeconomics Exam Review
1 Oct 2016
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Recall: perfectly competitive market has the following characteristics: many buyers + sellers, goods are homogeneous, firms can freely enter market. Because the perfectly competitive market has so many buyers and sellers: The actions of any single buyer or seller in the market have no impact on the market price. No one firm has any market power no firm is big and powerful enough to control price. Market demand supply determine price and every firm takes the market price as given they are price takers. When we examined a firm"s cost structure, we looked at mc and average costs. These concepts of marginal and average are useful to apply to a firm"s revenue. Recall: total revenue for a firm is the selling price times the quantity sold. Tr = pq: since p is given, the tr curve is a linear function of q, let"s draw one and throw in a typical tc curve.
