Reason for why the perfectly competitive buyers and sellers are price takers.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 13, Problem 1QE

To determine

Reason for why the perfectly competitive buyers and sellers are price takers.

Expert Solution & Answer

Explanation of Solution

Market equilibrium in a perfectly competitive market is attained with the forces of demand and supply. When the price is too high, the demand falls and when demand falls, only a price fall will lead to increase in demand for the market to fix itself. Perfectly competitive buyers and sellers are price takers because all the buyers and sellers have all the information and as there are large number of buyers and sellers dealing with homogeneous products, there will not be a single firm that can influence the price. If a firm increases the price, the buyers know that there are other sellers selling at the lower price and the firm that increased the price will have no buyers at all.

On the seller side, even though the price is low, he will not increase the price because when price increases, all the buyers will shift to the other sellers, as they know that they will be getting the same product at a low cost.

Economics Concept Introduction

Perfect competition: Perfect competition is a market structure where there are large number of buyers and sellers in the market selling the identical products.

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!

Students have asked these similar questions

With your team I would like you to complete the following questions after please post your replies and we will discuss in class Choose a financial instrument or market (such as stocks, bonds, insurance, cash, gold, bitcoin). Explain how investments work for the individual investor mainly yourself. With the current market upheaval and uncertainty what would you and your team consider the best options for investment. Consider the idea of short term investing vs long term investing, laddering, safe haven, liquidity, and risk) Consider Roth IRA vs traditional IRA, ETF's, CD's, Mutual Funds. Always consider taxes and inflation your return should always be greater then inflation and taxes.

Short Description Fiscal Policy Graph Details Shown is a Fiscal Policy diagram with the variable Real GDP (billions of dollars) on the x-axis and the variable Price Level on the y-axis. The x-axis is scaled from 0 to 800 billion dollars with an increment of 40 billion dollars, and the y-axis is scaled from 30 to 150 units with an increment of 5 units. Object Details On the graph we have:Four Line Objects:An upward sloping Aggregate Supply, AS line with two endpoints:Point 1 at (160, 70)Point 2 at (720, 140)A downward sloping Aggregate Demand, AD1 line with two endpoints:Point 1 at (80, 110)Point 2 at (640, 40)A vertical Long-run Aggregate Supply, LRAS with two endpoints:Point 1 at (400, 145)Point 2 at (400, 30)A downward sloping Aggregate Demand, AD line with two endpoints:Point 1 at (720, 60)Point 2 at (160, 130)Two Reference Points:Lines AS, AD, and LRAS intersect at (400, 100)Lines AS and AD1 intersect at (280, 85) a. How much does aggregate demand need to change to restore the…

Fiscal Policy Graph Details Shown is a Fiscal Policy diagram with the variable Real GDP (billions of dollars) on the x-axis and the variable Price Level on the y-axis. The x-axis is scaled from 0 to 1000 billion dollars with an increment of 50 billion dollars, and the y-axis is scaled from 0 to 180 units with an increment of 10 units. Object Details On the graph we have:Four Line Objects:An upward sloping Aggregate Supply, AS line with two endpoints:Point 1 at (200, 40)Point 2 at (800, 160)A downward sloping Aggregate Demand, AD line with two endpoints:Point 1 at (200, 160)Point 2 at (800, 40)A downward sloping Aggregate Demand, AD1 line with two endpoints:Point 1 at (350, 170)Point 2 at (900, 60)A vertical Long-run Aggregate Supply, LRAS line with two endpoints:Point 1 at (500, 170)Point 2 at (500, 0)Two Reference Points:Lines AS and AD1 intersect at (600, 120)Lines AS, AD, and LRAS intersect at (500, 100) a. How much does aggregate demand need to change to restore the…

Answer 2

Question

Chapter 13, Problem 1QE

To determine

Reason for why the perfectly competitive buyers and sellers are price takers.

Expert Solution & Answer

Explanation of Solution

Market equilibrium in a perfectly competitive market is attained with the forces of demand and supply. When the price is too high, the demand falls and when demand falls, only a price fall will lead to increase in demand for the market to fix itself. Perfectly competitive buyers and sellers are price takers because all the buyers and sellers have all the information and as there are large number of buyers and sellers dealing with homogeneous products, there will not be a single firm that can influence the price. If a firm increases the price, the buyers know that there are other sellers selling at the lower price and the firm that increased the price will have no buyers at all.

On the seller side, even though the price is low, he will not increase the price because when price increases, all the buyers will shift to the other sellers, as they know that they will be getting the same product at a low cost.

Economics Concept Introduction

Perfect competition: Perfect competition is a market structure where there are large number of buyers and sellers in the market selling the identical products.

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 3

Question

Chapter 13, Problem 1QE

To determine

Reason for why the perfectly competitive buyers and sellers are price takers.

Expert Solution & Answer

Explanation of Solution

Market equilibrium in a perfectly competitive market is attained with the forces of demand and supply. When the price is too high, the demand falls and when demand falls, only a price fall will lead to increase in demand for the market to fix itself. Perfectly competitive buyers and sellers are price takers because all the buyers and sellers have all the information and as there are large number of buyers and sellers dealing with homogeneous products, there will not be a single firm that can influence the price. If a firm increases the price, the buyers know that there are other sellers selling at the lower price and the firm that increased the price will have no buyers at all.

On the seller side, even though the price is low, he will not increase the price because when price increases, all the buyers will shift to the other sellers, as they know that they will be getting the same product at a low cost.

Economics Concept Introduction

Perfect competition: Perfect competition is a market structure where there are large number of buyers and sellers in the market selling the identical products.

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 4

Question

Chapter 13, Problem 1QE

To determine

Reason for why the perfectly competitive buyers and sellers are price takers.

Expert Solution & Answer

Explanation of Solution

Market equilibrium in a perfectly competitive market is attained with the forces of demand and supply. When the price is too high, the demand falls and when demand falls, only a price fall will lead to increase in demand for the market to fix itself. Perfectly competitive buyers and sellers are price takers because all the buyers and sellers have all the information and as there are large number of buyers and sellers dealing with homogeneous products, there will not be a single firm that can influence the price. If a firm increases the price, the buyers know that there are other sellers selling at the lower price and the firm that increased the price will have no buyers at all.

On the seller side, even though the price is low, he will not increase the price because when price increases, all the buyers will shift to the other sellers, as they know that they will be getting the same product at a low cost.

Economics Concept Introduction

Perfect competition: Perfect competition is a market structure where there are large number of buyers and sellers in the market selling the identical products.

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 13, Problem 1QE

To determine

Reason for why the perfectly competitive buyers and sellers are price takers.

Expert Solution & Answer

Explanation of Solution

Market equilibrium in a perfectly competitive market is attained with the forces of demand and supply. When the price is too high, the demand falls and when demand falls, only a price fall will lead to increase in demand for the market to fix itself. Perfectly competitive buyers and sellers are price takers because all the buyers and sellers have all the information and as there are large number of buyers and sellers dealing with homogeneous products, there will not be a single firm that can influence the price. If a firm increases the price, the buyers know that there are other sellers selling at the lower price and the firm that increased the price will have no buyers at all.

On the seller side, even though the price is low, he will not increase the price because when price increases, all the buyers will shift to the other sellers, as they know that they will be getting the same product at a low cost.

Economics Concept Introduction

Perfect competition: Perfect competition is a market structure where there are large number of buyers and sellers in the market selling the identical products.

Answer 6

Chapter 13, Problem 1QE

To determine

Reason for why the perfectly competitive buyers and sellers are price takers.

Expert Solution & Answer

Explanation of Solution

Market equilibrium in a perfectly competitive market is attained with the forces of demand and supply. When the price is too high, the demand falls and when demand falls, only a price fall will lead to increase in demand for the market to fix itself. Perfectly competitive buyers and sellers are price takers because all the buyers and sellers have all the information and as there are large number of buyers and sellers dealing with homogeneous products, there will not be a single firm that can influence the price. If a firm increases the price, the buyers know that there are other sellers selling at the lower price and the firm that increased the price will have no buyers at all.

On the seller side, even though the price is low, he will not increase the price because when price increases, all the buyers will shift to the other sellers, as they know that they will be getting the same product at a low cost.

Economics Concept Introduction

Perfect competition: Perfect competition is a market structure where there are large number of buyers and sellers in the market selling the identical products.

Answer 7

Chapter 13, Problem 1QE

To determine

Reason for why the perfectly competitive buyers and sellers are price takers.

Answer 8

Expert Solution & Answer

Explanation of Solution

Market equilibrium in a perfectly competitive market is attained with the forces of demand and supply. When the price is too high, the demand falls and when demand falls, only a price fall will lead to increase in demand for the market to fix itself. Perfectly competitive buyers and sellers are price takers because all the buyers and sellers have all the information and as there are large number of buyers and sellers dealing with homogeneous products, there will not be a single firm that can influence the price. If a firm increases the price, the buyers know that there are other sellers selling at the lower price and the firm that increased the price will have no buyers at all.

On the seller side, even though the price is low, he will not increase the price because when price increases, all the buyers will shift to the other sellers, as they know that they will be getting the same product at a low cost.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Perfect competition: Perfect competition is a market structure where there are large number of buyers and sellers in the market selling the identical products.

Answer 12

Ch. 13.1 - Prob. 1Q Ch. 13.1 - Prob. 2Q Ch. 13.1 - Prob. 3Q Ch. 13.1 - Prob. 4Q Ch. 13.1 - Prob. 5Q Ch. 13.1 - Prob. 6Q Ch. 13.1 - Prob. 7Q Ch. 13.1 - Prob. 8Q Ch. 13.1 - Prob. 9Q Ch. 13.1 - Prob. 10Q

Reason for why the perfectly competitive buyers and sellers are price takers.

Reason for why the perfectly competitive buyers and sellers are price takers.

Explanation of Solution

Want to see more full solutions like this?

Chapter 13 Solutions