ECON 202 Lecture Notes - Lecture 16: Universal Rule, Takers, Average Cost

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They need to know what will happen to their profits when they decide on different levels of output and/or pricing. Pricing affects a firm"s individual demand so they need to know what their firm-specific demand looks like and whether it is relatively elastic or inelastic. The # of competitors affect the level of substitutability available to consumers. (demand is elastic) cost structures can greatly affect the # of competitors in certain industries. A firm considers it"s own individual demand curve (means they"ll have implications to their product) Monopolistically competitive many firms, products are differentiated: what you see in general. Each market structure will be applicable to different real-world markets and will give us insight into how firms in certain types of markets behave. Perfectly competitive market there are many buyers/sellers, all firms sell identical products, and there are no barriers to new firms entering the market. The first and second conditions imply that competitive.

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