![]() ![]() Firms currently selling in the market may discontinue participation as sellers if they find the market unattractive. Firms that are not currently sellers in the market may enter as sellers if they find the market attractive. Firms that sell in the market are free to either enter or exit the market.The seller takes the price as given and decides the amount to produce that will generate the greatest profit. Due to its insignificant impact on the market, the seller acts as a price taker, meaning the seller presumes its production decisions have no impact on the price charged for the good by other sellers. Any single seller represents a very small fraction of all the purchases in a market. The buyer takes the price as given and decides the amount to purchase that best serves the utility of her household. Due to its insignificant impact on the market, the buyer acts as a price taker A buyer who presumes his or her purchase decision has no impact on the price charged for the good a seller who presumes its production decisions have no impact on the price charged for the good by other sellers., meaning the buyer presumes her purchase decision has no impact on the price charged for the good. Any single buyer represents a very small fraction of all the purchases in a market. The perfect competition model is built on five assumptions: An idealized market in which there are many buyers and sellers who are price takers, sellers are free to either enter or exit the market, the good or service being sold is the same for all sellers, and all buyers and sellers have perfect information. 6.1 Assumptions of the Perfect Competition Model ![]()
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