MATH 133 Lecture Notes - Lecture 9: Market Structure, Perfect Competition, Demand Curve

• School: McGill University
• Department: Mathematics & Statistics (Sci)
• Course: MATH 133
• Professor: Nagham Sayour

Document Summary

The competitiveness of the market - the influence that individual firms have on market prices. Individual firms have no power to affect the market prices. The less power an individual firm has to influence the market price, the more competitive is that market"s structure. The term competitive behaviour refers to the degree to which individual firms actively vie with one another for business. The degree to which the firms in the market compete. E. g. mastercard and visa engage in competitive behaviour but their market is not competitive. Two wheat farmers do not engage in competitive behaviour but they both exist in a very competitive market. The demand curve faced by an individual firm may be different from the demand curve for the industry as a whole. Market structure plays a central role in determining the efficiency of the market. In this chapter we focus on competitive market structure. Firms are free to enter and exit the industry.