Assignment 3 - Jennifer Mendoza Assignment Question 3 A...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Jennifer Mendoza – Assignment Question 3 10/09/11 A market is in perfect competition when all four of these conditions are completed: First, there much be numerous small firms and customers. Second, the product offered by any seller is identical to that supplied by any other seller. Third, firms have freedom to enter and exit the market, especially when unprofitable. Finally, every customer and firm all retains the perfect information and is well informed of products and prices. In perfect competition, firms really have no choice but to just accept the price the market will provide them, this makes them a price taker market. Since the price of $40 is what every day care charges, currently it is what the market will allow. Under perfect competition, new day care centers will enter with the same supply curves as the old centers and they enter on the same terms as the existing centers. The quantity supplied will be higher in the market and quantity demanded will fall causing prices to fall, especially if 500 is a large amount. In the short run once 500 more day care centers are added, the price of day care
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 2

Assignment 3 - Jennifer Mendoza Assignment Question 3 A...

This preview shows document pages 1 - 2. Sign up to view the full document.

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