EFB223 Lecture Notes - Autarky, Government Spending, Government Debt

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Remember, if the product is homogenous, and if there are many competitive selling the same product, and an individual firm or seller will have no control over the market price because remember once increase the price of saturday. Australia paper by even one cent, no will buy from you. Which means the demand curve you are facing will be horizontal in perfect market. No, they are different in many ways quality, location, service, decoration. No which means that if i increase the price, i may lose some customers but not all. This means that i am facing a downward sloping demand curve. If there are many competitions, what will happen to. If we have a coffee shop with a much steeper demand curve, d2 and another with a flatter demand curve, d1. If you are facing a steeper demand curve, you have a greater market power.

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