Three conditions for a market to be perfectively competitive.

Question

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Answer 1

Question

Chapter 12, Problem 12.1.1RQ

To determine

Three conditions for a market to be perfectively competitive.

Expert Solution & Answer

Explanation of Solution

The market is a structure where there are large number of buyers and sellers who sell and buy goods and services between themselves. The market competition is the market structure where there is competition among the large number of sellers in the market in order to satisfy the needs of the large number of consumers. There are three conditions that must be satisfied in order to become the market competitive. They are as follows:

1. There must be a large number of sellers and buyers in the market: The market will have a large number of producers producing the commodities in order to satisfy the needs of the large number of consumers.
2. The commodities in the market will be identical: There will be a large number of buyers and sellers in the market who compete with each other to satisfy the needs of the consumers. Thus, in order to have competition among the sellers, the commodities must be identical to each other.
3. There must be no barriers to entry and exit: The market will be open to all and there will be no barriers for the entry of new firm into the market as well as the exit of the existing firm from the market. When there is profit, new firms will enter and when there is loss, existing firms will shut down their production and exit the market.

Economics Concept Introduction

Concept introduction:

Market competition: A competitive market is one in which there is a large number of producers who compete with each other to satisfy the needs of the large number of consumers.

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Exercise 6 Imagine that you head production of a multinational food processing company. The ongoing uncer- tainty about costs means that you are unsure of the future cost of one of your inputs, x2. Your firm's production function is y = f(x1, x2) = x²x²² The output price p is 1000, x1 = 27, and wx₁ = 60. 1. Suppose the current input price is Wx2 = 50. Solve for the optimal choice of x2. 2. Now suppose that the probability the input price remains 50 is 0.65 and the probability that Wx2 60 is 0.35. Solve for the optimal choice of x2. Round down to the nearest integer. = 3. Finally, suppose the costs do actually rise, i.e., Wx2 = 60. Calculate the difference in profit from the uncertainty in (2) vs. the certainty in (1).

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Answer 2

Question

Chapter 12, Problem 12.1.1RQ

To determine

Three conditions for a market to be perfectively competitive.

Expert Solution & Answer

Explanation of Solution

The market is a structure where there are large number of buyers and sellers who sell and buy goods and services between themselves. The market competition is the market structure where there is competition among the large number of sellers in the market in order to satisfy the needs of the large number of consumers. There are three conditions that must be satisfied in order to become the market competitive. They are as follows:

1. There must be a large number of sellers and buyers in the market: The market will have a large number of producers producing the commodities in order to satisfy the needs of the large number of consumers.
2. The commodities in the market will be identical: There will be a large number of buyers and sellers in the market who compete with each other to satisfy the needs of the consumers. Thus, in order to have competition among the sellers, the commodities must be identical to each other.
3. There must be no barriers to entry and exit: The market will be open to all and there will be no barriers for the entry of new firm into the market as well as the exit of the existing firm from the market. When there is profit, new firms will enter and when there is loss, existing firms will shut down their production and exit the market.

Economics Concept Introduction

Concept introduction:

Market competition: A competitive market is one in which there is a large number of producers who compete with each other to satisfy the needs of the large number of consumers.

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Answer 3

Question

Chapter 12, Problem 12.1.1RQ

To determine

Three conditions for a market to be perfectively competitive.

Expert Solution & Answer

Explanation of Solution

The market is a structure where there are large number of buyers and sellers who sell and buy goods and services between themselves. The market competition is the market structure where there is competition among the large number of sellers in the market in order to satisfy the needs of the large number of consumers. There are three conditions that must be satisfied in order to become the market competitive. They are as follows:

1. There must be a large number of sellers and buyers in the market: The market will have a large number of producers producing the commodities in order to satisfy the needs of the large number of consumers.
2. The commodities in the market will be identical: There will be a large number of buyers and sellers in the market who compete with each other to satisfy the needs of the consumers. Thus, in order to have competition among the sellers, the commodities must be identical to each other.
3. There must be no barriers to entry and exit: The market will be open to all and there will be no barriers for the entry of new firm into the market as well as the exit of the existing firm from the market. When there is profit, new firms will enter and when there is loss, existing firms will shut down their production and exit the market.

Economics Concept Introduction

Concept introduction:

Market competition: A competitive market is one in which there is a large number of producers who compete with each other to satisfy the needs of the large number of consumers.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 12, Problem 12.1.1RQ

To determine

Three conditions for a market to be perfectively competitive.

Expert Solution & Answer

Explanation of Solution

The market is a structure where there are large number of buyers and sellers who sell and buy goods and services between themselves. The market competition is the market structure where there is competition among the large number of sellers in the market in order to satisfy the needs of the large number of consumers. There are three conditions that must be satisfied in order to become the market competitive. They are as follows:

1. There must be a large number of sellers and buyers in the market: The market will have a large number of producers producing the commodities in order to satisfy the needs of the large number of consumers.
2. The commodities in the market will be identical: There will be a large number of buyers and sellers in the market who compete with each other to satisfy the needs of the consumers. Thus, in order to have competition among the sellers, the commodities must be identical to each other.
3. There must be no barriers to entry and exit: The market will be open to all and there will be no barriers for the entry of new firm into the market as well as the exit of the existing firm from the market. When there is profit, new firms will enter and when there is loss, existing firms will shut down their production and exit the market.

Economics Concept Introduction

Concept introduction:

Market competition: A competitive market is one in which there is a large number of producers who compete with each other to satisfy the needs of the large number of consumers.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 12, Problem 12.1.1RQ

To determine

Three conditions for a market to be perfectively competitive.

Expert Solution & Answer

Explanation of Solution

The market is a structure where there are large number of buyers and sellers who sell and buy goods and services between themselves. The market competition is the market structure where there is competition among the large number of sellers in the market in order to satisfy the needs of the large number of consumers. There are three conditions that must be satisfied in order to become the market competitive. They are as follows:

1. There must be a large number of sellers and buyers in the market: The market will have a large number of producers producing the commodities in order to satisfy the needs of the large number of consumers.
2. The commodities in the market will be identical: There will be a large number of buyers and sellers in the market who compete with each other to satisfy the needs of the consumers. Thus, in order to have competition among the sellers, the commodities must be identical to each other.
3. There must be no barriers to entry and exit: The market will be open to all and there will be no barriers for the entry of new firm into the market as well as the exit of the existing firm from the market. When there is profit, new firms will enter and when there is loss, existing firms will shut down their production and exit the market.

Economics Concept Introduction

Concept introduction:

Market competition: A competitive market is one in which there is a large number of producers who compete with each other to satisfy the needs of the large number of consumers.

Answer 6

Chapter 12, Problem 12.1.1RQ

To determine

Three conditions for a market to be perfectively competitive.

Expert Solution & Answer

Explanation of Solution

The market is a structure where there are large number of buyers and sellers who sell and buy goods and services between themselves. The market competition is the market structure where there is competition among the large number of sellers in the market in order to satisfy the needs of the large number of consumers. There are three conditions that must be satisfied in order to become the market competitive. They are as follows:

1. There must be a large number of sellers and buyers in the market: The market will have a large number of producers producing the commodities in order to satisfy the needs of the large number of consumers.
2. The commodities in the market will be identical: There will be a large number of buyers and sellers in the market who compete with each other to satisfy the needs of the consumers. Thus, in order to have competition among the sellers, the commodities must be identical to each other.
3. There must be no barriers to entry and exit: The market will be open to all and there will be no barriers for the entry of new firm into the market as well as the exit of the existing firm from the market. When there is profit, new firms will enter and when there is loss, existing firms will shut down their production and exit the market.

Economics Concept Introduction

Concept introduction:

Market competition: A competitive market is one in which there is a large number of producers who compete with each other to satisfy the needs of the large number of consumers.

Answer 7

Chapter 12, Problem 12.1.1RQ

To determine

Three conditions for a market to be perfectively competitive.

Answer 8

Expert Solution & Answer

Explanation of Solution

The market is a structure where there are large number of buyers and sellers who sell and buy goods and services between themselves. The market competition is the market structure where there is competition among the large number of sellers in the market in order to satisfy the needs of the large number of consumers. There are three conditions that must be satisfied in order to become the market competitive. They are as follows:

1. There must be a large number of sellers and buyers in the market: The market will have a large number of producers producing the commodities in order to satisfy the needs of the large number of consumers.
2. The commodities in the market will be identical: There will be a large number of buyers and sellers in the market who compete with each other to satisfy the needs of the consumers. Thus, in order to have competition among the sellers, the commodities must be identical to each other.
3. There must be no barriers to entry and exit: The market will be open to all and there will be no barriers for the entry of new firm into the market as well as the exit of the existing firm from the market. When there is profit, new firms will enter and when there is loss, existing firms will shut down their production and exit the market.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Concept introduction:

Market competition: A competitive market is one in which there is a large number of producers who compete with each other to satisfy the needs of the large number of consumers.

Answer 12

Ch. 12 - Prob. 12.1.1RQ Ch. 12 - Prob. 12.1.2RQ Ch. 12 - Prob. 12.1.3RQ Ch. 12 - Prob. 12.1.4PA Ch. 12 - Prob. 12.1.5PA Ch. 12 - Prob. 12.1.6PA Ch. 12 - Prob. 12.1.7PA Ch. 12 - Prob. 12.1.8PA Ch. 12 - Prob. 12.2.1RQ Ch. 12 - Prob. 12.2.2RQ

Three conditions for a market to be perfectively competitive.

Three conditions for a market to be perfectively competitive.

Explanation of Solution

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