Econ. Recitation Notes 02

Econ. Recitation Notes 02 - Second Recitation 2.6 Markets...

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Second Recitation 2.6 Markets Perfect Competition : “Price takers”   take price as is b/c so many buyers + sellers in the market No entry / exit barriers  For example: If marginal benefit > marginal cost to sell, will sell All goods are identical Example: supermarkets? Monopolistic Competition : Slightly differentiated goods   brands Many buyers + sellers Example: sneakers? Oligopoly : Not always aggressive competition: sellers may work together / cooperate in the  market Few sellers Example: oil market? Monopoly : One seller = market power Entry / exit barriers Monopsony : One consumer  Free Trade: Assume Perfect Competition PPFs Fur Hats Vodka Bolivia 100 50 Russia 100 100  Straight lines in this example Opportunity Costs: Bolivia: comparative advantage in hats 1 unit of vodka = 2 fur hats 1 fur hat = 
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