ECON 2 Lecture Notes - Lecture 21: Average Variable Cost, Takers, Variable Cost
Document Summary
The following four conditions are characteristics of markets that are perfectly competitive: all firms sell the same standardized product. Although this condition is almost never literally satisfied, it holds as a rough approximation for many markets. Thus, the markets for concrete building blocks of a given size, or for apples of a given variety, may be described in this way. This condition implies that if a potential seller identifies a profitable business opportunity in a market, he or she will be able to obtain the labor, capital, and other productive resources necessary to enter that market. By the same token, sellers who are dissatisfied with the opportunities they confront in a given market are free to leave that market and employ their resources elsewhere: buyers and sellers are well informed. This condition implies that buyers and sellers are aware of the relevant opportunities available to them.