Step 1Read the following scenario.Imagine a market where there is perfect competition between two or more companies, such as a fish market where vendors offer the same products at the same price or online ticket auctions like StubHub. In this market there are four key elements to perfect competition:a large number of buyers and sellersno barriers to entry or exitperfect mobility for customers choosing productshomogenous productsStep 2Use the scenario to answer the following questions. in Step 1:Explain how output, price, and profit are determined in your perfectly competitive market in the long run.How does that lead to efficiency?How could changes in technology affect the market?How could an increase in demand affect the market?What are the effects of new businesses entering the market?What are the effects of businesses leaving the market?

Answered: Read the following scenario. Imagine a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Step 1

Read the following scenario.

Imagine a market where there is perfect competition between two or more companies, such as a fish market where vendors offer the same products at the same price or online ticket auctions like StubHub. In this market there are four key elements to perfect competition:

a large number of buyers and sellers
no barriers to entry or exit
perfect mobility for customers choosing products
homogenous products

Step 2

Use the scenario to answer the following questions.

in Step 1:

Explain how output, price, and profit are determined in your perfectly competitive market in the long run.
How does that lead to efficiency?
How could changes in technology affect the market?
How could an increase in demand affect the market?
What are the effects of new businesses entering the market?
What are the effects of businesses leaving the market?

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