Assumptions of a Perfectly Competitive Market By Delcie Peters.
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Transcript of Assumptions of a Perfectly Competitive Market By Delcie Peters.
![Page 1: Assumptions of a Perfectly Competitive Market By Delcie Peters.](https://reader030.fdocuments.net/reader030/viewer/2022032805/56649ee75503460f94bf867e/html5/thumbnails/1.jpg)
Assumptions of a Perfectly Competitive
Market
By Delcie Peters
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In a perfectly competitive market, no participants are
large enough to have market power..
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There are six conditions we covered
in class…
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Private Good
ExcludableOnce consumed, this good may not be available for others
Rival in consumptionSatisfies individual want
Prevents consumption at the same time
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Examples of private goods: clothing and
food
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Homogeneous Good
All units are the samePhysically identical or…
Viewed as identical by buyers
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Examples of homogeneous good: metal & barrel of oil
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Many Buyers, Many Sellers
Price is essentially set by the market
A seller may reason: “If I charge more than market price, customers will know they can get a better deal somewhere else. They will then buy from the competition, and I won’t have customers.”
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Perfect Property Rights
Perfectly defined
Transferrable (legal and protected)
Enforceable
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No Barriers to Entry or Exit
It is relatively easy for a business to enter or exit in a perfectly competitive market.
Minimal fees and regulations
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Perfect Information
Quality and price of a product are assumed to be known by all consumers and producers.
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Sources
www.businessdictionary.com
www.faculty.lebow.drexel.edu
www.glossary.com
www.wikipedia.com
Econ 202 Notes