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Canada (161,962)
Economics (923)
ECN 104 (387)
Chapter 7

Chapter 7

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ECN 104
Halis Yildiz

Chapter 7: Perfect Competition 7.1 Four Market Structures Perfect competition: a market structure in which a very large number of firms produce a standardized product; product identical to that of other producers, new firms can enter the industry very easy (Ex. Corn or cucumbers) Monopoly: a market structure in which one firm is the sole seller of a productservice; produces a unique product (Ex. Regional electrical power supplier) Monopolistic competition: a market structure in which a relatively large number of sellers produce differentiated products (Ex. Clothing, furniture, books) Non price competition: selling strategy in which one firm tries to distinguish productservice from all competing products (product differentiation) Oligopoly: a market structure in which a few large turns produce homogeneousdifferentiated products; firm affected by decisions of rivals and take those decisions into account when determining own price & output Imperfect competition: the market models of monopoly, monopolistic competition, and oligopoly considered as a group 7.2 Characteristics of Perfect Competition & the Firms Demand Curve Very large numbers: presence of large numbers of sellers offering products in large nationalinternational markets (Ex. Farm commodities market, stock market, foreign exchange market) Standardized product: produce identicalhomogeneous product; make no attempt to differentiate products and dont engage in forms of non price competition Price-takers: a firm in a purely competitive market that cannot change market price, only adjust to it Easy entity and exit: new firms can enter, existing firms can leave Average, Total, and Marginal Revenue Average revenue: total revenue from the scale of a product divided by the quantity of the product sold Total revenue: the total number of dollars received by a firm from the sale of a product www.notesolution.com
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