ECN_203__6___Competitive Markets (sp08)

ECN_203__6___Competitive Markets (sp08) - Chapter 6...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 6 Competitive Markets Assumption- No individual buyer or seller controls the market (no market power). Ensures markets are competitive : 1) Large # of buyers and sellers in the market,-- price takers (must take P as set by market ) 2) Same quality of good across sellers. 3) No barriers to entry or exit. 4) Equal access to information Competitive Markets Competitive markets reach their most efficient point: 1. Ensures firms find & implement the most efficient ( lowest cost ) technique of production. 2. Rewards firms for finding innovative ways for efficiency ( temporarily!) Competitive Markets 1. Eventually, a point will be reached where the buyers are paying the lowest possible price while still covering the firms economic costs of producing (firms making a normal return). Competitive Markets Magic of Markets-- even with changing market conditions, competitive markets will always reach their most efficient point. Invisible Hand-- an unseen process that guides a market to efficiency (Adam Smith 1776). Production Decision and Profits Recall, a firm chooses to produce where P=MC. P set in market....
View Full Document

This note was uploaded on 04/18/2008 for the course ECN 203 taught by Professor Evensky during the Spring '07 term at Syracuse.

Page1 / 20

ECN_203__6___Competitive Markets (sp08) - Chapter 6...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online