ECON 1100 Chapter Notes - Chapter 9: Average Variable Cost, Economic Equilibrium, Marginal Revenue
Document Summary
A market is said to have a competitive structure when its firms have little or no market power. The more market power the firms have, the less competitive is the market structure. There are assumptions behind competitive markets/perfect competition (many producers & many consumers: each firm produces the same product (homogeneous, there are large numbers of firms/producers in each industry/sector (they are price takers) No single firm produces more than a small fraction of the industry"s output: there is a complete knowledge on the part of each seller/firm and buyer. Every seller and every consumer know the characteristics of the product and the market equilibrium price: there are no barriers for producers to exit the industry or enter the industry! No government regulations or other types of barriers. All wheat is similar to each other, similarity/homogeneous. All by assumption #2, they have to accept the market equilibrium price. Sector of services (accounting, hair salons, medical)