Log in
HomeTextbook Notes300,000CA170,000

ECON 2310 Chapter 4: Intermediate Economics Chapter Fourteen Notes

80 views4 pages
School
University of Guelph
Department
Economics
Course
ECON 2310
Professor
Johanna Goertz

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

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.

Get access

Grade+
$40 USD/m
Billed monthly
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
10 Verified Answers
Class+
$30 USD/m
Billed monthly
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
7 Verified Answers

Related Documents

ECON 2310 Chapter Notes - Chapter 14: Competitive Equilibrium, Longrun
azurecrow744
ECON 2310 Lecture Notes - Lecture 14: Demand Curve, Deadweight Loss, Perfect Competition
ceruleanalpaca747
ECON 2310 Lecture Notes - Lecture 2: Demand Curve, Economic Equilibrium, Shortage
peartermite830

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.

 

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.

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.