Perfect Competition Flashcards
What does competiton relate to
Completion relates to the number of firms in the market
Which of the following is NOT a market structure
- Monopoly
- oligolopoly
- monopolistic competeion
-imperfect competition
Imperfect competition
It is meant o be perfect competition
Name the market structures
Monopoly
Oligopoly
Monopolistic competition
Perfect competition
Name 3 characteristics of perfect competition
- Price takers (they accept the market price)
- Sell identical products
- No barriers to entry
Name 1 example of perfect competition
Grain market.
Many suppliers one product
Would firms involved in perfect competition have an elastic or lactic graph
Give reason
Elastic
Can sell as much as they want with same price
How would to calculate average revenue
Total revenue / quantity
Define marginal revenue with both words and formula
Change in total revenue due to an extra unit being sold
Change in total revenue/change in quantity
MR. = price
How are profits calculated
Total revenue - total costs
What formula can be used to measure profits
= (P - ATC) *QQ
WHAT ARE THE STEPS TO MEASURING PROFITS GRAPHICALLY?
- Find where mc = mr
- Find the quantity that maximise profits
- Find price
- Find average total cost
- Find the difference between p and atc and then multiply QQ
What are erode profits?
These are abnormal profits
What happens when a company is marketing a short run loss?
Decrease in market quantity
Characteristics of a long run position in perfect competition
Zero normal profits
Productive efficiency
Allocative efficiency
