The characteristics of a perfectly competitive market structure.

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Answer 1

Question

Chapter 23, Problem 23.1LO

To determine

The characteristics of a perfectly competitive market structure.

Expert Solution & Answer

Explanation of Solution

Perfectly competitive market is the market in which there are a large number of buyers and sellers. Each buyer and seller individually has no control over the market. The market forces determine the market price and the individual firms are price takers.

Following are the features of a perfectly competitive market.

a. Free entry and exit: In a perfectly competitive market, there is no restriction on firm’s market entry and exit. If the existing firms make profits, then new firms will enter the market. On the other hand, a firm can freely exit the market if it incurs losses.

b. Large number of buyers and sellers: In a perfectly competitive market, there are a large number of buyers and sellers. Each buyer and seller has no influence over market price of the good.

c. Homogeneous goods: The products produced and sold by a perfectly competitive firm are identical. This means that products of a perfectly competitive firm are perfect substitutes for each other.

d. Perfect knowledge: The buyers and sellers in a perfectly competitive market have perfect market information. This means buyers and sellers have complete information about the price prevailing in the market.

e. Perfect mobility of factors of production: In a perfectly competitive market, factors of production are completely mobile leading to factor-price equalization throughout the market.

Economics Concept Introduction

Introduction:

Perfectly competitive market is the market in which there are a large number of buyers and sellers. Each buyer and seller individually has no control over the market. The price in this market is determined by demand and supply forces in the market and the individual firms are price takers.

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Labor Market Data Price $5 $10 $15 $20 $25 3,000,000 6,000,000 9,000,000 12,000,000 15,000,000 Qd 15,000,000 12,000,000 9,000,000 6,000,000 3,000,000 Price $30 $25 $20 $15 $10 $5 + +- x- 3 6 Do + + F 9 12 15 Quantity (In millions) Area of a triangle = 1/2* base *height Market Efficiency & Total Surplus Worth Publishers SCENARIO: The state government is considering raising the minimum wage from $15 per hour to $20 per hour over the next 3 years. As an economic advisor to the governor, you have been asked to provide a recommendation on whether the minimum wage should be increased based on economic theory. Consider the labor market data provided. Prepare a brief report that: 1. Explains whether the labor market is currently efficient at the equilibrium wage of $15 per hour. How would you know? At equilibrium, what (dollar amount) is the Total Surplus this market provides? Show your rationale with numbers. 2. Analyzes the impact on total surplus in the market if the minimum wage is raised…

Answer 2

Question

Chapter 23, Problem 23.1LO

To determine

The characteristics of a perfectly competitive market structure.

Expert Solution & Answer

Explanation of Solution

Perfectly competitive market is the market in which there are a large number of buyers and sellers. Each buyer and seller individually has no control over the market. The market forces determine the market price and the individual firms are price takers.

Following are the features of a perfectly competitive market.

a. Free entry and exit: In a perfectly competitive market, there is no restriction on firm’s market entry and exit. If the existing firms make profits, then new firms will enter the market. On the other hand, a firm can freely exit the market if it incurs losses.

b. Large number of buyers and sellers: In a perfectly competitive market, there are a large number of buyers and sellers. Each buyer and seller has no influence over market price of the good.

c. Homogeneous goods: The products produced and sold by a perfectly competitive firm are identical. This means that products of a perfectly competitive firm are perfect substitutes for each other.

d. Perfect knowledge: The buyers and sellers in a perfectly competitive market have perfect market information. This means buyers and sellers have complete information about the price prevailing in the market.

e. Perfect mobility of factors of production: In a perfectly competitive market, factors of production are completely mobile leading to factor-price equalization throughout the market.

Economics Concept Introduction

Introduction:

Perfectly competitive market is the market in which there are a large number of buyers and sellers. Each buyer and seller individually has no control over the market. The price in this market is determined by demand and supply forces in the market and the individual firms are price takers.

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

Answer 3

Question

Chapter 23, Problem 23.1LO

To determine

The characteristics of a perfectly competitive market structure.

Expert Solution & Answer

Explanation of Solution

Perfectly competitive market is the market in which there are a large number of buyers and sellers. Each buyer and seller individually has no control over the market. The market forces determine the market price and the individual firms are price takers.

Following are the features of a perfectly competitive market.

a. Free entry and exit: In a perfectly competitive market, there is no restriction on firm’s market entry and exit. If the existing firms make profits, then new firms will enter the market. On the other hand, a firm can freely exit the market if it incurs losses.

b. Large number of buyers and sellers: In a perfectly competitive market, there are a large number of buyers and sellers. Each buyer and seller has no influence over market price of the good.

c. Homogeneous goods: The products produced and sold by a perfectly competitive firm are identical. This means that products of a perfectly competitive firm are perfect substitutes for each other.

d. Perfect knowledge: The buyers and sellers in a perfectly competitive market have perfect market information. This means buyers and sellers have complete information about the price prevailing in the market.

e. Perfect mobility of factors of production: In a perfectly competitive market, factors of production are completely mobile leading to factor-price equalization throughout the market.

Economics Concept Introduction

Introduction:

Perfectly competitive market is the market in which there are a large number of buyers and sellers. Each buyer and seller individually has no control over the market. The price in this market is determined by demand and supply forces in the market and the individual firms are price takers.

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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 23, Problem 23.1LO

To determine

The characteristics of a perfectly competitive market structure.

Expert Solution & Answer

Explanation of Solution

Perfectly competitive market is the market in which there are a large number of buyers and sellers. Each buyer and seller individually has no control over the market. The market forces determine the market price and the individual firms are price takers.

Following are the features of a perfectly competitive market.

a. Free entry and exit: In a perfectly competitive market, there is no restriction on firm’s market entry and exit. If the existing firms make profits, then new firms will enter the market. On the other hand, a firm can freely exit the market if it incurs losses.

b. Large number of buyers and sellers: In a perfectly competitive market, there are a large number of buyers and sellers. Each buyer and seller has no influence over market price of the good.

c. Homogeneous goods: The products produced and sold by a perfectly competitive firm are identical. This means that products of a perfectly competitive firm are perfect substitutes for each other.

d. Perfect knowledge: The buyers and sellers in a perfectly competitive market have perfect market information. This means buyers and sellers have complete information about the price prevailing in the market.

e. Perfect mobility of factors of production: In a perfectly competitive market, factors of production are completely mobile leading to factor-price equalization throughout the market.

Economics Concept Introduction

Introduction:

Perfectly competitive market is the market in which there are a large number of buyers and sellers. Each buyer and seller individually has no control over the market. The price in this market is determined by demand and supply forces in the market and the individual firms are price takers.

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Answer 5

Chapter 23, Problem 23.1LO

To determine

The characteristics of a perfectly competitive market structure.

Expert Solution & Answer

Explanation of Solution

Perfectly competitive market is the market in which there are a large number of buyers and sellers. Each buyer and seller individually has no control over the market. The market forces determine the market price and the individual firms are price takers.

Following are the features of a perfectly competitive market.

a. Free entry and exit: In a perfectly competitive market, there is no restriction on firm’s market entry and exit. If the existing firms make profits, then new firms will enter the market. On the other hand, a firm can freely exit the market if it incurs losses.

b. Large number of buyers and sellers: In a perfectly competitive market, there are a large number of buyers and sellers. Each buyer and seller has no influence over market price of the good.

c. Homogeneous goods: The products produced and sold by a perfectly competitive firm are identical. This means that products of a perfectly competitive firm are perfect substitutes for each other.

d. Perfect knowledge: The buyers and sellers in a perfectly competitive market have perfect market information. This means buyers and sellers have complete information about the price prevailing in the market.

e. Perfect mobility of factors of production: In a perfectly competitive market, factors of production are completely mobile leading to factor-price equalization throughout the market.

Economics Concept Introduction

Introduction:

Perfectly competitive market is the market in which there are a large number of buyers and sellers. Each buyer and seller individually has no control over the market. The price in this market is determined by demand and supply forces in the market and the individual firms are price takers.

Answer 6

Chapter 23, Problem 23.1LO

To determine

The characteristics of a perfectly competitive market structure.

Expert Solution & Answer

Explanation of Solution

Perfectly competitive market is the market in which there are a large number of buyers and sellers. Each buyer and seller individually has no control over the market. The market forces determine the market price and the individual firms are price takers.

Following are the features of a perfectly competitive market.

a. Free entry and exit: In a perfectly competitive market, there is no restriction on firm’s market entry and exit. If the existing firms make profits, then new firms will enter the market. On the other hand, a firm can freely exit the market if it incurs losses.

b. Large number of buyers and sellers: In a perfectly competitive market, there are a large number of buyers and sellers. Each buyer and seller has no influence over market price of the good.

c. Homogeneous goods: The products produced and sold by a perfectly competitive firm are identical. This means that products of a perfectly competitive firm are perfect substitutes for each other.

d. Perfect knowledge: The buyers and sellers in a perfectly competitive market have perfect market information. This means buyers and sellers have complete information about the price prevailing in the market.

e. Perfect mobility of factors of production: In a perfectly competitive market, factors of production are completely mobile leading to factor-price equalization throughout the market.

Economics Concept Introduction

Introduction:

Perfectly competitive market is the market in which there are a large number of buyers and sellers. Each buyer and seller individually has no control over the market. The price in this market is determined by demand and supply forces in the market and the individual firms are price takers.

Answer 7

Chapter 23, Problem 23.1LO

To determine

The characteristics of a perfectly competitive market structure.

Answer 8

Expert Solution & Answer

Explanation of Solution

Perfectly competitive market is the market in which there are a large number of buyers and sellers. Each buyer and seller individually has no control over the market. The market forces determine the market price and the individual firms are price takers.

Following are the features of a perfectly competitive market.

a. Free entry and exit: In a perfectly competitive market, there is no restriction on firm’s market entry and exit. If the existing firms make profits, then new firms will enter the market. On the other hand, a firm can freely exit the market if it incurs losses.

b. Large number of buyers and sellers: In a perfectly competitive market, there are a large number of buyers and sellers. Each buyer and seller has no influence over market price of the good.

c. Homogeneous goods: The products produced and sold by a perfectly competitive firm are identical. This means that products of a perfectly competitive firm are perfect substitutes for each other.

d. Perfect knowledge: The buyers and sellers in a perfectly competitive market have perfect market information. This means buyers and sellers have complete information about the price prevailing in the market.

e. Perfect mobility of factors of production: In a perfectly competitive market, factors of production are completely mobile leading to factor-price equalization throughout the market.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Introduction:

Perfectly competitive market is the market in which there are a large number of buyers and sellers. Each buyer and seller individually has no control over the market. The price in this market is determined by demand and supply forces in the market and the individual firms are price takers.

Answer 12

Ch. 23 - Prob. 23.1LO Ch. 23 - Prob. 23.2LO Ch. 23 - Prob. 23.3LO Ch. 23 - Prob. 23.4LO Ch. 23 - Prob. 23.5LO Ch. 23 - Prob. aFCT Ch. 23 - Prob. bFCT Ch. 23 - Prob. cFCT Ch. 23 - Prob. 1CTQ Ch. 23 - Prob. 2CTQ

The characteristics of a perfectly competitive market structure.

The characteristics of a perfectly competitive market structure.

Explanation of Solution

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