Assignment 3 - Jennifer Mendoza Assignment Question 3...

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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
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This note was uploaded on 12/21/2011 for the course ECON 101 taught by Professor Higgins during the Spring '11 term at University of Nevada, Las Vegas.

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Assignment 3 - Jennifer Mendoza Assignment Question 3...

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