3C: Market systems Flashcards
1
Q
What is perfect competition?
A
Perfect competition is a market structure where there are many firms and competitive prices.
2
Q
What do features of perfect competition include?
A
Many small firms
Freedom of entry and exit which will require long sunk costs
All firms produce an identical or homogeneous product
All firms are price takers; therefore the firms demand curve is perfectly elastic
There is perfect information and knowledge for both consumers and producers
3
Q
What are examples of perfect competition?
A
Foreign exchange markets, many agricultural markets and walking tourist guides
4
Q
What does Market Structures refer to?
A
The number and sixe of businesses in a market and the way they compete
