Econ212+Spring2013+Le_Linh+Notes_for_Week_10

Pure competition many firms all making the same

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Unformatted text preview: f each small firm. Decisions by any one small firm do not noticeably affect the payoffs of any other firm. • Monopolistic Competition: Many firms each making a slightly different product. Each firm’s output level is small relative to the total. • Pure Competition: Many firms, all making the same product. Each firm’s output level is small relative to the total. This chapter explores only pure competition 22.2. Pure competition • A firm in a perfectly competitive market knows it has no influence over the market price for its product. The firm is a market price- taker. • The firm is free to vary its own price. • If the firm sets its own price above the market price then the quantity demanded from the firm is zero. • If the firm sets its own price...
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This note was uploaded on 02/25/2014 for the course ECON 212 taught by Professor Mirobins during the Spring '08 term at Mt. Holyoke.

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