ECO 1102 Lecture Notes - Marginal Revenue, Perfect Competition, Demand Curve
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14 Nov 2013
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ECO 1102 Full Course Notes
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Market structure: provides the final component that is needed to derive the s curve: the rules of the game for buying/selling, after production has taken place. It places constraints on the pricing behavior of firms. The pricing behavior of a competitive market is very different to the pricing behavior of a monopoly market. Up until now, we still do not know which p and q the firm will select. The 4 assumptions/ characteristics used to build the model of perfect competition. Free entry into the industry (no significant barriers to entry)(this assumption. Every supplier knows the prices and quality of products in the market, There is no such thing as a perfectly competitive market. There are some markets that resemble it, examples include: fast food, retail grocery. Mr= marginal revenue= increment to tr obtained by selling one more unit of output. Average revenue= tr/q = p*q/q = price of the good (p)
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