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108139
Perfect Competition
Description
A-Levels Economics Mind Map on Perfect Competition, created by cdsmith123 on 25/05/2013.
No tags specified
economics
economics
a-levels
Mind Map by
cdsmith123
, updated more than 1 year ago
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Created by
cdsmith123
over 11 years ago
163
1
0
Resource summary
Perfect Competition
ASSUMPTIONS
LARGE NUMBER OF BUYERS+SELLERS - NO INDIVIDUAL CAN ALTER THE MARKET PRICE
PERFECT INFORMATION OF ALL PRODUCTS
EQUAL ACCESS TO TECHNOLOGY
HOMOGENEOUS PRODUCTS
NO BARRIERS TO ENTRY OR EXIT
PERFECTLY MOBILE FACTORS OF PRODUCTION
LONG RUN = profits cannot be made
firm would be competed away
produce at market clearing price
ATC=MC
SHORT RUN = If ATC is below market clearing price
Abnormal profits made
signals to other firms to enter market
supply increase = price set below market clearing = ATC=MC
LONG RUN = firms statically efficient
both productively + allocatively efficient at the same time
Firms being making losses
supply reduces
price increases
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