L6-PerfectCompetition - Perfect Competition Chapter 14 1....

Info iconThis preview shows pages 1–7. 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: Perfect Competition Chapter 14 1. WHAT IS A COMPETITIVE MARKET? z A perfectly competitive market has the following characteristics: There are many buyers and sellers in the market. The goods offered by the various sellers are largely the same. Firms can freely enter or exit the market. Firm as a price taker z As a result of its characteristics, the perfectly competitive market has the following outcomes: The actions of any single buyer or seller in the market have a negligible impact on the market price. Each buyer and seller takes the market price as given. 2. A FIRM IN A COMPETITIVE MARKET z Total revenue for a firm is the selling price times the quantity sold . TR = (P TR = (P Q) Q) z Total revenue is proportional to the amount of output. Average Revenue z Average revenue tells us how much revenue a firm receives for the typical unit sold. z Average revenue is total revenue divided by the quantity sold. z Average revenue equals the price of the good. Marginal Revenue z Marginal revenue is the change in total revenue from an additional unit sold....
View Full Document

This note was uploaded on 05/15/2008 for the course ECON 2106 taught by Professor Minjaesong during the Spring '06 term at Georgia Institute of Technology.

Page1 / 19

L6-PerfectCompetition - Perfect Competition Chapter 14 1....

This preview shows document pages 1 - 7. Sign up to view the full document.

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