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Chapter 3 - Competitive markets and perfect competition
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econ3
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economics
econ3
aqa
n/a
Mind Map by
usman ahmed
, updated more than 1 year ago
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Created by
usman ahmed
about 10 years ago
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Resource summary
Chapter 3 - Competitive markets and perfect competition
Perfect competition assumptions
Many buyers and sellers
Firms are price takers
homogenous product
perfect knowledge of product/service
perfect mobility of factors
readily available information
No barriers to entry or exit
Super-normal profit in short term only
In long run firms are statically efficient, but not dynamically efficient
Static - Allocative(AR=MC) & Productive(MC=AC)
Dynamic - R+D that lowers the LRAC
Shutdown point - firm will choose to continue production or stop trading depending on which option gives a lower loss
Cannot price below AVC curve, else it shuts down immediately
Agriculture resembles P.C.
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