Market Structures Flashcards
1
Q
What are the characteristics of a perfect competition market structure
A
Many small firms
Homogeneous goods sold
No barriers to entry or exit
Perfect knowledge of pricing and output decision
Price takers - the firms are too small to be able to influence price
Firms are profit maximisers
2
Q
Where is the profit maximising point
A
Where MC = MR
3
Q
Where is the productive efficient point
A
At the lowest point on AC curve
4
Q
Where is supernormal profits
A
It’s a box made from AC to MC
