Chapter 14

Chapter 14 - Chapter 14 Firms in Competitive Markets What...

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Unformatted text preview: Chapter 14 Firms in Competitive Markets What is a Competitive Market? A competitive market has many buyers and sellers trading identical products so that each buyer and seller is a price taker . Buyers and sellers must accept the price determined by the market. The Meaning of Competition 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. The Revenue of a Competitive Firm Total revenue for a firm is the selling price times the quantity sold. TR = ( P Q ) Total revenue is proportional to the amount of output. The Revenue of a Competitive Firm Average revenue tells us how much revenue a firm receives for the typical unit sold. Average revenue is total revenue divided by the quantity sold....
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Chapter 14 - Chapter 14 Firms in Competitive Markets What...

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