Perfect Competition Flashcards
One firm in a perfectly competitive market produces only a negligible amount of the total quantity of the commodity provided in the market
There are many buyers and sellers in the market
All firms produce a standardize or homogenous commodity, which means the commodity produced by one firm is no different from a commodity produced by any other firm
Each firm in the market produces identical products
The good’s price and quality are known to all buyers and sellers
Buyers and sellers have perfect information
There are no barriers to entry in a perfect competition
This is free entry into and exit from the market
It is the short run decision not to produce anything because of market conditions
Shutdown
It is the long-run decision to leave the market
Exit
It means that price equals average to average total cost
Zero economic profit
