Using the three characteristics of a perfectly competitive market (p. 400), analyze the market in which your company (or a company of your choice) operates. Address each characteristic. Does it meet these requirements? If so, how? If not, why not?Hint: Keep in mind the title of the Discuss question. That should be a clue to how you will answer about your firm. Discuss with your classmates the characteristics of their businesses that you find interesting. 11.1CHARACTERISTICSOF PERFECT COMPETITIONThe most important characteristic of perfectly competitive markets is that each firm in a competitive market behavesas a price-taker: Competitive firms take the market price of the product, which is determined by the intersection ofsupply and demand, as given. This price-taking behavior is the hallmark of a competitive market. In all other marketstructures-monopoly, monopolistic competition, and oligopoly-firms enjoy some degree of price-setting power.Three characteristics define perfect competition:perfect competitionA market structure that exists when (1) firms are price-takers, (2) all firms produce a homogeneous product, and (3) entryand exit are unrestricted.1. Perfectly competitive firms are price-takers because each individual firm in the market is so small relative to thetotal market that it cannot affect the market price of the good or service it produces by changing its output. Ofcourse, if all producers act together, changes in quantity will definitely affect market price. But if perfectcompetition prevails, each producer is so small that individual changes will go unnoticed.2. All firms produce a homogeneous or perfectly standardized commodity. The product of each firm in a perfectlycompetitive market is identical to the product of every other firm. This condition ensures that buyers areindifferent as to the firm from which they purchase. Product differences, whether real or imaginary, areprecluded under perfect competition.3. Entry into and exit from perfectly competitive markets are unrestricted. There are no barriers preventing newfirms from entering the market, and nothing prevents existing firms from leaving a market.In spite of the term competitive, perfectly competitive firms do not recognize any competitiveness amongthemselves; that is, no direct competition among firms exists. The theoretical concept of perfect competition isdiametrically opposed to the generally accepted concept of competition. Because firms in perfectly competitive< 400/730 >

Introduction:- A perfectly competitive market is an industry structure in which firms produce…

Using the three characteristics of a perfectly competitive market (p. 400), analyze the market in which your company (or a company of your choice) operates. Address each characteristic. Does it meet these requirements? If so, how? If not, why not? Hint: Keep in mind the title of the Discuss question. That should be a clue to how you will answer about your firm. Discuss with your classmates the characteristics of their businesses that you find interesting.

Using the three characteristics of a perfectly competitive market (p. 400), analyze the market in which your company (or a company of your choice) operates. Address each characteristic. Does it meet these requirements? If so, how? If not, why not? Hint: Keep in mind the title of the Discuss question. That should be a clue to how you will answer about your firm. Discuss with your classmates the characteristics of their businesses that you find interesting.

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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