ECO101H1 Chapter Notes - Chapter 12: Perfect Competition, Marginal Revenue, Marginal Cost
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ECO101H1 Full Course Notes
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Chapter 12: perfect competition and the supply curve. A price-talking producer is a producer whose actions have no effect on the market price of the good or service it sells. A price-taking consumer is a consumer whose actions have no effect on the market price of the good or service he or she buys. A perfectly competitive market is a market in which all participants are price-takers. As a general rule, consumers are price-takers; it is, however, quite common for producers to have price-setting abilities: an industry in which all producers are price-takers is called a perfectly competitive industry. Necessary conditions for perfect competition: for an industry to be perfectly competitive, it must contain many producers, none of whom have a large market share. A producer"s market share is the fraction of the total industry output accounted for by that producer"s output: the industry output is a standardized product.