2350perfectcompetition

2350perfectcompetition - The Assumptions of Perfect...

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

View Full Document Right Arrow Icon

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

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: The Assumptions of Perfect Competition 1. Large Numbers: No individual consumer buys and no individual firm produces a significant proportion of the total output. (No economies of scale at the firm level; minimum efficient scale is a small portion of the total amount produced.) 2. Product Homogeneity: In any given market, the products of all firms are identical. 3. Perfect Information: All participants have perfect knowledge of all relevant prices, the characteristics/quality of the good, and of all relevant technological information 4. Perfect Mobility of Resources: All inputs are perfectly mobile. Firms can freely allocate resources to different uses, to enter or to leave the industry itself. 5. Independence: Each persons utility function is independent of the consumption and production choices made by others. (E.g., Jerrys utility function doesnt include Toms driving habits.) Each firms production function is independent of the consumption and production choices made by others. (E.g., The fishers catch is not affected by Hydros choice to use a coal or nuclear plants.) No Public Goods : Goods that are nonrival (all can consume the same unit of the good at the same time) and nonexcludable (no one can be excluded from consuming the good once it is produced).the good once it is produced)....
View Full Document

This note was uploaded on 02/29/2012 for the course ECON 2350 taught by Professor Bardis during the Fall '12 term at York University.

Page1 / 4

2350perfectcompetition - The Assumptions of Perfect...

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