1.5 PERFECT COMPETITION Flashcards
1
Q
PERFECT COMPETITION
A
0% market concentration
many buyers and sellers
perfect information
homogenous products
firms are profit maximisers and consumers are utility maximisers
= price takers
2
Q
CAN PROFITS BE MADE IN THE SHORT RUN
A
no as profits (supernormal or subnormal) act as an incentive to producers to either enter or leave the market
3
Q
non collusive
A
The idea that firms do not come together to set agreements on price and/or output.
