469125
Description
Mind Map by usman ahmed, updated more than 1 year ago
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Created by usman ahmed
almost 11 years ago
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Chapter 3 - Competitive markets and
perfect competition
- Perfect competition assumptions
- Many buyers and sellers
- Firms are price takers
- homogenous product
- perfect knowledge of product/service
- perfect mobility
of factors
- readily available
information
- No barriers to entry or exit
- Many buyers and sellers
- Super-normal profit in short term only
- In long run firms are statically efficient,
but not dynamically efficient
- Static - Allocative(AR=MC) &
Productive(MC=AC)
- Dynamic - R+D that lowers the LRAC
- Static - Allocative(AR=MC) &
Productive(MC=AC)
- Shutdown point - firm will choose to continue production
or stop trading depending on which option gives a lower
loss
- Cannot price below AVC curve, else it
shuts down immediately
- Cannot price below AVC curve, else it
shuts down immediately
- Agriculture resembles P.C.
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