chapterchaptereleveneleven©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbard,AnthonyPatrickO’Brien—1sted.Preparedby:Fernando&YvonnQuijanoFirmsinPerfectlyCompetitiveMarkets2of35©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbard,AnthonyPatrickO’Brien—1sted.CHAPTER11:FirmsinPerfectlyCompetitiveMarketsAfterstudyingthischapter,youshouldbeableto:Defineaperfectlycompetitivemarket,andexplainwhyaperfectcompetitorfacesahorizontaldemandcurve.Explainhowaperfectcompetitordecideshowmuchtoproduce.Usegraphstoshowafirm’sprofitorloss.Explainwhyfirmsmayshutdowntemporarily.Explainhowentryandexitensurethatfirmsearnzeroeconomicprofitinthelongrun.Explainhowperfectcompetitionleadstoeconomicefficiency.PerfectCompetitionintheMarketforOrganicApplesLEARNINGOBJECTIVES12345Theprocessofcompetitionisattheheartofthemarketsystemandisthefocusofthischapter.63of35©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbard,AnthonyPatrickO’Brien—1sted.CHAPTER11:FirmsinPerfectlyCompetitiveMarketsFirmsinPerfectlyCompetitiveMarketsMARKETSTRUCTURECHARACTERISTICPERFECTCOMPETITIONMONOPOLISTICCOMPETITIONOLIGOPOLYMONOPOLYNumberoffirmsTypeofproductEaseofentryExamplesofindustriesManyIdenticalHigh•Wheat•ApplesManyDifferentiatedHigh•SellingDVDs•RestaurantsFewIdenticalordifferentiatedLow•Manufacturingcomputers•ManufacturingautomobilesOneUniqueEntryblocked•First-classmaildelivery•TapwaterTheFourMarketStructures11–14of35©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbard,AnthonyPatrickO’Brien—1sted.CHAPTER11:FirmsinPerfectlyCompetitiveMarketsPerfectlyCompetitiveMarketsLEARNINGOBJECTIVE1PerfectlycompetitivemarketAmarketthatmeetstheconditionsof(1)manybuyersandsellers,(2)allfirmssellingidenticalproducts,(3)nobarrierstonewfirmsenteringthemarket.5of35©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbard,AnthonyPatrickO’Brien—1sted.CHAPTER11:FirmsinPerfectlyCompetitiveMarketsPerfectlyCompetitiveMarketsAPerfectlyCompetitiveFirmCannotAffecttheMarketPricePricetakerAbuyerors...
