Perfect competition Flashcards
1
Q
number of businesses
A
many buyers/sellers no single business can influence the market price
2
Q
nature of product
A
homogenous
3
Q
market entry
A
completely free
4
Q
control over price
A
no control (firms are price takers)
5
Q
demand curve
A
perfectly elastic (horizontal) demand curve
6
Q
profit
A
economic profit in short run
profit attracts new entrants into the market
normal profit in long run
7
Q
collusion
A
impossible
participants have full knowledge of market conditions
8
Q
productive efficiency
A
efficient: goods are produced at lowest cost possible
9
Q
allocative efficiency
A
efficient: quantities required are available
10
Q
decision making
A
each firm makes independent decisions
