MicroEconomics - Lecture 6

MicroEconomics - Lecture 6 - Perfect Competition 1. What is...

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Perfect Competition 1. What is a Competitive Market? A perfectly competitive market has the following characteristics: There are many buyers and sellers in the market. The goods offered by the various sellers are largely the same. Firms can freely enter or exit the market. As a result of its characteristics, the perfectly competitive market has the following outcomes: The actions of any single buyer or seller in the market have a negligible impact on the market price. Each buyer and seller takes the market price as a given. 2. A Firm In a Competitive Market Total Revenue for a firm is the selling price time the quantity sold. TR = (P x Q) Total revenue is proportional to the amount of output. Average Revenue tells us how much revenue a firm receives for the typical unit sold. Average revenue is total revenue divided by the quantity sold. Average revenue equals the price of the good. Marginal Revenue is the change in total revenue from an additional unit sold. MR = ^TR/^Q
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This note was uploaded on 04/09/2008 for the course ECON 2106 taught by Professor Minjaesong during the Fall '06 term at Georgia Institute of Technology.

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MicroEconomics - Lecture 6 - Perfect Competition 1. What is...

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