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Mô tả chi tiết
© 2003 McGraw-Hill Ryerson Limited.
Perfect Competition
Chapter 11
© 2003 McGraw-Hill Ryerson Limited.
11 - 2
Laugher Curve
Q. How many economists does it take to
screw in a light bulb?
A. Eight.
One to screw it in and seven to hold
everything else constant.
© 2003 McGraw-Hill Ryerson Limited.
11 - 3
Perfect Competition
The concept of competition is used in
two ways in economics.
Competition as a process is a rivalry
among firms.
Competition as a market structure.
© 2003 McGraw-Hill Ryerson Limited.
11 - 4
Competition as a Process
Competition involves one firm trying to
take away market share from another
firm.
As a process, competition pervades the
economy.
© 2003 McGraw-Hill Ryerson Limited.
11 - 5
A Perfectly Competitive
Market
A perfectly competitive market is one
which has highly restrictive
assumptions, but which provides us
with a reference point we can use in
comparing different markets.
© 2003 McGraw-Hill Ryerson Limited.
11 - 6
A Perfectly Competitive
Market
In a perfectly competitive market:
The number of firms is large.
The firms' products are identical.
There is free entry and exit, that is, there
are no barriers to entry.
There is complete information.
Firms are profit maximizers.
Both buyers and sellers are price takers.
© 2003 McGraw-Hill Ryerson Limited.
11 - 7
The Necessary Conditions
for Perfect Competition
The number of firms is large.
Large number of firms means that any one
firm's output is very small when
compared with the total market.
What one firm does has no bearing on
market quantity or market price.
© 2003 McGraw-Hill Ryerson Limited.
11 - 8
The Necessary Conditions
for Perfect Competition
Firms' products are identical.
This requirement means that each firm's output is
indistinguishable from any other firm’s output.
Firms sell homogeneous product.