COMM 295 Chapter Notes - Chapter 8: Cost Curve, Deadweight Loss, Tl;Dr
Document Summary
Buyers and sellers are both price takers. Firm is price taker when demand curve is horizontal as raising price will lose sales. Market consists of many small buyers and sellers (price takers - no one can single handily change price) All market participants have full info on price and product characteristics (consumers are aware that all products are the same) Transaction costs = negligible (don"t need people searching and spending time/money to write trade contracts) Freedom to enter and exit market in lr (no barriers to entry) Many markets are very close but not perfect comp. Gov"t creates a bte but still a large market so still price takers. Competitive is a price taker, competition sees rms rivals for consumers. For us we see both as price takers. The period long enough to have one input vary (usually labour because capital takes longer to change) Looks at 1) how much to produce, and 2) whether to produce.
