Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Perfect competition refers to the situation where there are many buyers and sellers exist in the market. All the firms are selling homogenous goods. Price is fixed by the market demand and supply. Firms and individuals are price taker. Individual firms or individual consumer cannot influence the price. Firms are easily enters and exists to the market.
In the perfect competition, firms are producing output at the point where the demand and supply intersects each other. In the perfect competition marginal cost (MC) curve is the supply curve. Also demand curve, average revenue (AR) cure and marginal revenue curve (MR) curve coincide with each other.
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