ECO101H1 Chapter Notes - Chapter 12: Market Power, Marginal Revenue, Perfect Competition
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ECO101H1 Full Course Notes
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Whe(cid:374) the(cid:396)e is e(cid:374)ough (cid:272)o(cid:373)petitio(cid:374), that it does(cid:374)"t eve(cid:374) (cid:373)ake se(cid:374)se to ide(cid:374)tify you(cid:396) (cid:396)ivals. Their actions have no effect on the market price of the good or service it they sell. Actions have no effect on the market price of the good or service that they buy. It is a market in which all market participants are price-takers. It is an industry in which all producers are price takers. Two necessary conditions for perfect competition: must contain a lot of producers, they have a small portion of market share, if consume(cid:396)s (cid:396)ega(cid:396)d the p(cid:396)odu(cid:272)ts of all p(cid:396)odu(cid:272)e(cid:396)"s e(cid:395)uivale(cid:374)t. They also have free entry and exit, which means anyone can enter and leave as they please and they are no additional costs to do this. Using marginal analysis to choose the profit maximizing quantity of output. The optimal amount of an activity is the level at which marginal benefit is equal to marginal cost.