Microeconomics: Perfect Competition

Study Notes

Characteristics:
- Many firms producing identical products
- Free entry and exit of firms in the market
- Perfect information about prices and products
- No externalities or public goods
Firm's goal: Maximize profits
Price and output determination: Firms are price-takers, meaning they have no control over the market price
Long-run equilibrium: Firms earn normal profits, and there is no tendency for firms to enter or exit the market

Characteristics:
- Single firm producing a unique product
- Barriers to entry, making it difficult for new firms to enter the market
- Firm has significant market power and can influence the market price
Firm's goal: Maximize profits
Price and output determination: Firm is a price-maker, meaning it has control over the market price
Long-run equilibrium: Firm earns abnormal profits, and there is no tendency for firms to enter the market

Characteristics:
- Many firms producing differentiated products
- Free entry and exit of firms in the market
- Firms have some degree of market power due to product differentiation
Firm's goal: Maximize profits
Price and output determination: Firms have some control over the market price, but are also influenced by competitors
Long-run equilibrium: Firms earn normal profits, and there is no tendency for firms to enter or exit the market

Characteristics:
- Few firms producing either identical or differentiated products
- Barriers to entry, making it difficult for new firms to enter the market
- Firms have significant market power and can influence the market price
Firm's goal: Maximize profits
Price and output determination: Firms are interdependent, meaning they consider the actions and reactions of competitors
Long-run equilibrium: Firms earn abnormal profits, and there is no tendency for firms to enter the market

Many firms produce identical products, creating a highly competitive market
Free entry and exit of firms in the market, allowing for easy movement
Firms have perfect information about prices and products, making informed decisions possible
No externalities or public goods to affect market outcomes
Firms aim to maximize profits, driving their decision-making
Firms are price-takers, with no control over the market price
In the long-run equilibrium, firms earn normal profits, with no incentive for firms to enter or exit the market

A single firm produces a unique product, granting it significant market power
Barriers to entry make it difficult for new firms to enter the market, protecting the monopoly
The firm has significant market power, allowing it to influence the market price
The firm aims to maximize profits, driving its decision-making
The firm is a price-maker, with control over the market price
In the long-run equilibrium, the firm earns abnormal profits, with no incentive for firms to enter the market

Many firms produce differentiated products, creating a competitive market with some uniqueness
Free entry and exit of firms in the market, allowing for easy movement
Firms have some degree of market power due to product differentiation, influencing their decision-making
Firms aim to maximize profits, driving their decision-making
Firms have some control over the market price, but are also influenced by competitors
In the long-run equilibrium, firms earn normal profits, with no incentive for firms to enter or exit the market

A few firms produce either identical or differentiated products, creating a concentrated market
Barriers to entry make it difficult for new firms to enter the market, protecting the existing firms
Firms have significant market power, allowing them to influence the market price
Firms aim to maximize profits, driving their decision-making
Firms are interdependent, considering the actions and reactions of competitors in their decision-making
In the long-run equilibrium, firms earn abnormal profits, with no incentive for firms to enter the market