Competition_Review.docVIP

Chapter 12: Firms in Competitive Markets Competition ( the decisions of individual buyers and sellers have no effect on Pe Example: agricultural markets. Characteristics: 1. A large number of buyers and sellers. 2. A homogeneous product. 3. Free entry and exit, no major barriers to entry or exit. 4. Sellers and buyers are well informed about prices. Demand, Average Revenue and Marginal Revenue Firms are price takers – no matter how much a firm decides to sell, it has to adopt the price from the market: P P