1 / 5

Understanding Perfect Competition: Market Equilibrium and Competition

Learn about perfect competition, where many firms produce the same goods, leading to market equilibrium. Conditions, benefits, barriers, and how it keeps prices low and production efficient.

julius
Télécharger la présentation

Understanding Perfect Competition: Market Equilibrium and Competition

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Perfect Competiton

  2. Competition • Perfect competition- ideal market where many firms produce same good or service • Market equilibrium and firms compete for your money & 4 Conditions • 1.Many buyers and sellers. • 2. Sellers offer identical goods • 3. Buyers and sellers are well informed • 4. Sellers able to enter and exit market freely

  3. Conditions • Many participants allows supply and demand to ebb and flow- no individual can skew • Similar products or commodities-allows for quality comparison for consumer • Milk, notebook paper, gasoline • Informed- sellers know demand and buyers know product • Free entry/exit for firms encourages firms

  4. Barriers • Barriers to entry-any factors that discourage a firms entry into a market • Imperfect competition- a condition where factors do no meet perfect competition • 1. Start up costs- expenses a firm must come up with to produce and sell goods • 2. Technology & knowledge- many firms/services require skill and tech know how

  5. Price and Output • Perfectly competitive markets are efficient • Competition keeps prices and production costs low • Firms must use all capital to best of ability • In a perfectly competitive market- opportunity costs are accurate in all areas • Equilibrium price & market is very stable

More Related