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CLEP Microeconomic Notes 1

Competition causes firms to be efficient 151 perfect

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Competition causes firms to be efficient 151) Perfect Competition markets have: (a.i.1) The most substitute products available (a.i.2) The most elasticity (a.i.3) Largest number of sellers (a.i.4) Firms that are price- takers (a.i.5) THE GREATEST OUTPUT!! 152) Barriers affect different market types: a.i) Perfect Competition – no barriers to entry or exit a.ii) Monopolistic Competition – weak barriers may exist a.iii) Oligopoly – large barriers prevent most entry a.iv) Monopoly – complete barriers prevent all entry 153) Nash Equilibrium – is a strategy that requires each firm to base its decisions on the strategies of other firms a) Seeks a point where each firm gains the same amount of utility
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