ECON101 Chapter Notes - Chapter 12: Average Variable Cost, Perfect Competition, Marginal Revenue

• School: University of Waterloo
• Department: Economics
• Course: ECON101
• Professor: Robert Park

Document Summary

Many firms sell identical products to many buyers. There are no restrictions on entry into the market. Established firms have no advantage over new ones. Sellers and buyers are well informed about prices. Ex. farming, fishing, wood puling, paper milling, dry cleaning. Firm"s minimum efficient scale is small relative to market demand so there is room for many firms in the market. Each firm is perceived to produce a g/s that has no unique characteristics, so consumers don"t care which firm"s good they buy. Price taker: a firm that cannot influence the market price because its production is an insignificant part of the total market. Everyone is a price takers (take price given by the market demand and supply) No consumer or supplier is so large that they can decide to raise/reduce price. If the market price of wheat is , then that is the highest price you can get for your wheat.