Ch 9 Competitive Markets - CompetitiveMarkets 23:16

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Competitive Markets 23:16 A marker is said to have a  competitive market structure  when its firms have little or no  market power.  The more market power the firms have, the less competitive is the  market structure.  Perfectly competitive market  is a market where there is no need for individual firms to  compete actively with one another because none has any power over the market.  Can  only affect profits by change their output quantity or own production cost. Difference b/w  AMEX and wheat farmers is the  degree of market power. Key Assumptions of the Theory of Perfect Competition Many Sellers : - one firm more or less does not affect industry supply                            - Firm’s LRAC-min (MES) small relative to industry                            - Industry supply is fairly constant Selling a homogeneous good :-perfect competition (No mkt power) seller has no control over price bc many sellers selling firm demand is horizontal (perfectly elastic) identical  goods are very rare, thus PC very rare Free Entry and Exit :- no “barriers to entry” (BTE) entry/exit of new/old firm into industry is  relatively 
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This note was uploaded on 10/19/2011 for the course ECON 101/102 taught by Professor Gateman&neary during the Spring '09 term at The University of British Columbia.

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Ch 9 Competitive Markets - CompetitiveMarkets 23:16

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