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Ch 10 Perfect Competition

Ch 10 Perfect Competition - Perfect Competition Chapter 10...

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Perfect Competition Chapter 10 1
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Industry Classification Perfect Competition : when there are many firms each selling an identical product many buyers no restrictions on the entry of new firms in to the industry Corn, rice, and grain crops Monopolistic Competition : market structure in which a large number of firms compete by making similar but slightly different products 2
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Industry Classification Oligopoly : market structure in which a small number of firms compete Coke and Pepsi Monopoly : arises when there is one firm, which produces a good or service that has no close substitutes and in which the firm is protected by a barrier preventing the entry of new firms Utility Companies, Microsoft, Google 3
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Market Structure 4 Price Taker : a firm that cannot influence the market price because it’s production is an insignificant portion of the total market. Most Competitiv e Least Competitiv e
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Industry Concentration Concentration : measure of competitiveness of the industry, higher concentration is less competitive Concentration Ratio : the percentage of the value of the sales accounted for by the four largest firms in an industry, generally less then 60% is a competitive market Example: 6 firms 20% 20% 20% 20% 10% 10% →80% of market for top 4 firm (CR=80) 5
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Industry Concentration
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