ECON 10010 Chapter Notes - Chapter 12: Fixed Cost, Allocative Efficiency, Sunk Costs
Document Summary
Week 10: oct 30 - chapter 12: firms in perfectly. Industry: all the firms selling a particular good or service. Example of a perfectly competitive industry = poultry farming. Most industries, though, are not perfectly competitive: in most industries, firms do not sell identical products, in some industries, it may be difficult for new firms to enter. Any industry has 3 characteristics: number of firms in the industry, similarity of the goods and services produced by the firms in the industry, the ease with which new firms enter the industry. With these characteristics, firms are classified into 4 market structures: Conditions for a perfectly competitive market: there must be many buyers and many firms, all of which are small relative to the market, all firms must sell identical products, no barriers for firms entering the market. A perfectly competitive firm cannot affect the market price. In a perfectly competitive market, prices are determined by the interaction of supply and demand.
