ECON 2310 Chapter 4: Intermediate Economics Chapter Fourteen Notes

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burgundychinchilla338

14 Jan 2012

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Chapter fourteen equilibrium and efficiency y what makes a market competitive: three factors cause a market to be perfectly competitive. The first factor is the absence of transactions costs. Transactions costs are absent when sellers can easily communicate their prices, buyers can easily locate suppliers and learn their prices, and buyers and sellers can arrange transactions without significant obstacles. This means that when different sellers produce the same product buyers will have no difficulty identifying and purchasing from the seller who offers it at the best terms: the second factor is product homogeneity. Products are homogeneous when they are identical in the eyes of purchasers. They are differentiated when some purchasers view the products as different: the third factor is the presence of a large number of sellers, each of whom accounts for a small fraction of the market supply.

Related Questions

A perfectly competitive market is a market that meets the conditions of:

(i) many buyers and sellers, all firms selling differentiated products, and no barriers to new firms entering the market.

(ii) few buyers and sellers, all firms selling identical products, and no barriers to new firms entering the market.

(iii) many buyers and sellers, all firms selling identical products, and significant barriers to new firms entering the market.

(iv) many buyers and sellers, all firms selling identical products, and no barriers to new firms entering the market.

ceruleankangaroo217

What conditions make a market perfectly competitive? A market is perfectly competitive if:

(i) it has many buyers and one firm, which produces a product with no close substitutes, with barriers to new firms entering the market.

(ii) it has many buyers and many sellers, all of whom are selling differentiated products, with no barriers to new firms entering the market.

(iii) it has many buyers and a few sellers, all of whom are selling identical products, with no barriers to new firms entering the market.

(iv) it has many buyers and a few sellers, all of whom are selling differentiated products, with barriers to new firms entering the market.

(v) it has many buyers and many sellers, all of whom are selling identical products, with no barriers to new firms entering the market.

ambertiger96

What are the three conditions for a market to be perfectly competitive? For a market to be perfectly competitive, there must be:

A. many buyers and one seller, with the firm producing a product that has no close substitutes, and barriers to new firms entering the market.

B. many buyers and sellers, with firms selling similar but not identical products, with low barriers to new firms entering the market

C. many buyers and a few sellers, with all firms selling identical products, and no barriers to new firms entering the market.

D. many buyers and sellers, with all firms selling identical products, and no barriers to new firms entering the market.

E. many buyers and a small number of firms that compete, selling differentiated products, and barriers to new firms entering the market.

amberhamster945

ECON 2310 Chapter 4: Intermediate Economics Chapter Fourteen Notes

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