Chapter Ten NOTES - Chapter Ten 3/24/2008 10:18:00 AM...

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Chapter Ten 24/03/2008 10:18:00 Perfect Competition- When that industry is made up of many small firms  producing homogeneous product, when there is no impediment to the entry or exit of  firms, and when full information is available. Four Conditions Numerous small firms and customers- There are so many customers and firms  out there that one customer or firm has very low impact on the price. When firms work  together then they can have some impact Homogeneity of product- The product offered by any seller is identical to that  supplied by any other seller. Because products are homogeneous , consumers do not  care from which firm they buy, so competition is more powerful  Freedom of entry and exit- New firms desiring to enter the market face no  impediments that previous entrants can avoid. New firms can easily come in and  compete with older firms. There are also no barriers to leave the market if the sale of 
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This note was uploaded on 03/28/2008 for the course ECON 06E:001:AA taught by Professor Nelson during the Spring '08 term at University of Iowa.

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Chapter Ten NOTES - Chapter Ten 3/24/2008 10:18:00 AM...

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