Why doesn´t an individual have the power to affect the price of a product in a perfectly competitive market?
Because no individual has a part big enough of the market to affect it
Because an enterprise is the owner of the market
Because there is no competition
Because the market is unfair
In a perfect competition market, who determines the prices?
The owners of firms
Consumers, by market supply and market demand
The product being produced
The availability of the product in the market
Why can´t a firm set its prices below market price?
Because they would not have costumers, as they prefer other brands and would remain loyal to this other brands
The firm wouldn´t be able to acomodate all of the new costumers they would have, making demand to increase, costs to sky rocket and the firm having to raise prices to remove certain costumers
The market would see a decrease in the demand of the product, as it would become less exclusive so a shift in consumption towards homogenous products would be seen
As consumers are very inelastic, they would wan´t to see even a higher drop in the price, thus for waiting until that happens to consume
What can a firm in a perfectly competitive market choose?
Price of the good
Demand for the good
Supply of the good
Output produced
What is revenue
Demand divided units sold
Units sold minus supply
Price charged times units sold
Income times supply
Why is revenue usually higher in the short run?
Because the firm is more motivated to work
Because the firm is highly recursive
Because there is less competition
Because the owner pays more attention
When does the entry to a market stop?
When supply is low and demand is high
When demand is high and supply is low
Until a new market appears
Until price is average to total cost
Are the following characteristics of perfect competition? There are a large number of sellers, price can be changed by individual firms, and consumers have perfect knowledge
Perfect competition markets mean no profit
P=D
