The four main characteristics of perfect competition are:
Producers are not strictly price-takers. Generally, the more competitive a market is, the less pricing power a firm has, and the more of a price-taker it is than a price-maker. Since basic economic analysis usually focuses on a perfectly competitive market, a producer is a price-taker because it cannot change its price from the equilibrium condition Price = Marginal Cost = Marginal Revenue because it will be undersold by its competitors if it raises it price.
The perfectly competitive market is an economic anomaly; it does not exist in real life, because of the unreal circumstances that need to occur in perfectly competitive industries. Perfectly competitive markets have so many competing firms, that one firm cannot change the overall market price of the good that the firm is selling. In a perfectly competitive market, there is perfect economic efficiency for each firm. Each firm's demand curves are perfectly elastic (vertical), although the industry's D curve is not. Another characteristic is that the firms MR curve is equivalent to product price is equivalent to the demand curve is equal to total revenue. These are not all of the characteristics of perfect competition, but these are the basic defining features of this market type.A picture of a perfect competitor's cost curves: http://ourtwocents.files.wordpress.com/2008/04/perfect-competition.pngSecond answerNote: it is important to bear in mind that perfect competition is not a real thing. It is an idealised model which is analysed in Economics the way perfectly elastic collisions, point masses, incompressible materials, perfect vacuums, perfect insulators, perfect conductors, massless inextensible strings, Newtonian fluids, and volumes with no gravitational field in them are used in physics. It is an idealised baseline from which real phenomena are expected to deviate because of their idiosyncratic features. Also, it is not the only such model: other ideals include perfectly price-discriminating monopoly, market-segmenting monopoly, non-price discriminating monopoly, bilateral monopoly, natural monopoly, oligopoly, market-leader oligopoly, monopolistic competition, commons, club goods, pure public goods....The characteristics of perfect competition are that:There is a large number of firms, so many that the demand function facing an individual firm is effectively perfectly elasticThe firms produce a uniform, homogenous productThere is a large number of consumers, none of which exercises market power nor prefers one firms' product over any others'The consumers and firms are fully and costlessly informed of all prices, and know the quality and properties of the product.The firms cannot or do not colludeThe consumers cannot or do not colludeThere are zero transaction costsAll firms have the same cost functionAll firms are run by entrepreneurs who seek to maximise their profit after paying or imputing costs to factors at uniform market pricesThere are no barriers to entry or exit from the industryAll factors of production are completely mobile in the long runShort-run and long-run economies of scale are limited in such a way that the firms' short-run and long-run average cost curves are U-shaped.
The perfectly competitive market is an economic anomaly; it does not exist in real life, because of the unreal circumstances that need to occur in perfectly competitive industries. Perfectly competitive markets have so many competing firms, that one firm cannot change the overall market price of the good that the firm is selling. In a perfectly competitive market, there is perfect economic efficiency for each firm. Each firm's demand curves are perfectly elastic (vertical), although the industry's D curve is not. Another characteristic is that the firms MR curve is equivalent to product price is equivalent to the demand curve is equal to total revenue. These are not all of the characteristics of perfect competition, but these are the basic defining features of this market type.A picture of a perfect competitor's cost curves: http://ourtwocents.files.wordpress.com/2008/04/perfect-competition.pngSecond answerNote: it is important to bear in mind that perfect competition is not a real thing. It is an idealised model which is analysed in economics the way perfectly elastic collisions, point masses, incompressible materials, perfect vacuums, perfect insulators, perfect conductors, massless inextensible strings, Newtonian fluids, and volumes with no gravitational field in them are used in physics. It is an idealised baseline from which real phenomena are expected to deviate because of their idiosyncratic features. Also, it is not the only such model: other ideals include perfectly price-discriminating monopoly, market-segmenting monopoly, non-price discriminating monopoly, bilateral monopoly, natural monopoly, oligopoly, market-leader oligopoly, monopolistic competition, commons, club goods, pure public goods....The characteristics of perfect competition are that:There is a large number of firms, so many that the demand function facing an individual firm is effectively perfectly elasticThe firms produce a uniform, homogenous productThere is a large number of consumers, none of which exercises market power nor prefers one firms' product over any others'The consumers and firms are fully and costlessly informed of all prices, and know the quality and properties of the product.The firms cannot or do not colludeThe consumers cannot or do not colludeThere are zero transaction costsAll firms have the same cost functionAll firms are run by entrepreneurs who seek to maximise their profit after paying or imputing costs to factors at uniform market pricesThere are no barriers to entry or exit from the industryAll factors of production are completely mobile in the long runShort-run and long-run economies of scale are limited in such a way that the firms' short-run and long-run average cost curves are U-shaped.
how does the market mechanism solve the basic problem of free market economy?
the basic coordinating mechanism in a free market system is Price.
Private ownership of property, free market competition, and profit motive are the three basic characteristics of a capitalist system.
Private Property, a market system, and worker freedom.
Producers are not strictly price-takers. Generally, the more competitive a market is, the less pricing power a firm has, and the more of a price-taker it is than a price-maker. Since basic economic analysis usually focuses on a perfectly competitive market, a producer is a price-taker because it cannot change its price from the equilibrium condition Price = Marginal Cost = Marginal Revenue because it will be undersold by its competitors if it raises it price.
The perfectly competitive market is an economic anomaly; it does not exist in real life, because of the unreal circumstances that need to occur in perfectly competitive industries. Perfectly competitive markets have so many competing firms, that one firm cannot change the overall market price of the good that the firm is selling. In a perfectly competitive market, there is perfect economic efficiency for each firm. Each firm's demand curves are perfectly elastic (vertical), although the industry's D curve is not. Another characteristic is that the firms MR curve is equivalent to product price is equivalent to the demand curve is equal to total revenue. These are not all of the characteristics of perfect competition, but these are the basic defining features of this market type.A picture of a perfect competitor's cost curves: http://ourtwocents.files.wordpress.com/2008/04/perfect-competition.pngSecond answerNote: it is important to bear in mind that perfect competition is not a real thing. It is an idealised model which is analysed in Economics the way perfectly elastic collisions, point masses, incompressible materials, perfect vacuums, perfect insulators, perfect conductors, massless inextensible strings, Newtonian fluids, and volumes with no gravitational field in them are used in physics. It is an idealised baseline from which real phenomena are expected to deviate because of their idiosyncratic features. Also, it is not the only such model: other ideals include perfectly price-discriminating monopoly, market-segmenting monopoly, non-price discriminating monopoly, bilateral monopoly, natural monopoly, oligopoly, market-leader oligopoly, monopolistic competition, commons, club goods, pure public goods....The characteristics of perfect competition are that:There is a large number of firms, so many that the demand function facing an individual firm is effectively perfectly elasticThe firms produce a uniform, homogenous productThere is a large number of consumers, none of which exercises market power nor prefers one firms' product over any others'The consumers and firms are fully and costlessly informed of all prices, and know the quality and properties of the product.The firms cannot or do not colludeThe consumers cannot or do not colludeThere are zero transaction costsAll firms have the same cost functionAll firms are run by entrepreneurs who seek to maximise their profit after paying or imputing costs to factors at uniform market pricesThere are no barriers to entry or exit from the industryAll factors of production are completely mobile in the long runShort-run and long-run economies of scale are limited in such a way that the firms' short-run and long-run average cost curves are U-shaped.
The perfectly competitive market is an economic anomaly; it does not exist in real life, because of the unreal circumstances that need to occur in perfectly competitive industries. Perfectly competitive markets have so many competing firms, that one firm cannot change the overall market price of the good that the firm is selling. In a perfectly competitive market, there is perfect economic efficiency for each firm. Each firm's demand curves are perfectly elastic (vertical), although the industry's D curve is not. Another characteristic is that the firms MR curve is equivalent to product price is equivalent to the demand curve is equal to total revenue. These are not all of the characteristics of perfect competition, but these are the basic defining features of this market type.A picture of a perfect competitor's cost curves: http://ourtwocents.files.wordpress.com/2008/04/perfect-competition.pngSecond answerNote: it is important to bear in mind that perfect competition is not a real thing. It is an idealised model which is analysed in economics the way perfectly elastic collisions, point masses, incompressible materials, perfect vacuums, perfect insulators, perfect conductors, massless inextensible strings, Newtonian fluids, and volumes with no gravitational field in them are used in physics. It is an idealised baseline from which real phenomena are expected to deviate because of their idiosyncratic features. Also, it is not the only such model: other ideals include perfectly price-discriminating monopoly, market-segmenting monopoly, non-price discriminating monopoly, bilateral monopoly, natural monopoly, oligopoly, market-leader oligopoly, monopolistic competition, commons, club goods, pure public goods....The characteristics of perfect competition are that:There is a large number of firms, so many that the demand function facing an individual firm is effectively perfectly elasticThe firms produce a uniform, homogenous productThere is a large number of consumers, none of which exercises market power nor prefers one firms' product over any others'The consumers and firms are fully and costlessly informed of all prices, and know the quality and properties of the product.The firms cannot or do not colludeThe consumers cannot or do not colludeThere are zero transaction costsAll firms have the same cost functionAll firms are run by entrepreneurs who seek to maximise their profit after paying or imputing costs to factors at uniform market pricesThere are no barriers to entry or exit from the industryAll factors of production are completely mobile in the long runShort-run and long-run economies of scale are limited in such a way that the firms' short-run and long-run average cost curves are U-shaped.
The perfectly competitive market is an economic anomaly; it does not exist in real life, because of the unreal circumstances that need to occur in perfectly competitive industries. Perfectly competitive markets have so many competing firms, that one firm cannot change the overall market price of the good that the firm is selling. In a perfectly competitive market, there is perfect economic efficiency for each firm. Each firm's demand curves are perfectly elastic (vertical), although the industry's D curve is not. Another characteristic is that the firms MR curve is equivalent to product price is equivalent to the demand curve is equal to total revenue. These are not all of the characteristics of perfect competition, but these are the basic defining features of this market type.A picture of a perfect competitor's cost curves: http://ourtwocents.files.wordpress.com/2008/04/perfect-competition.pngSecond answerNote: it is important to bear in mind that perfect competition is not a real thing. It is an idealised model which is analysed in Economics the way perfectly elastic collisions, point masses, incompressible materials, perfect vacuums, perfect insulators, perfect conductors, massless inextensible strings, Newtonian fluids, and volumes with no gravitational field in them are used in physics. It is an idealised baseline from which real phenomena are expected to deviate because of their idiosyncratic features. Also, it is not the only such model: other ideals include perfectly price-discriminating monopoly, market-segmenting monopoly, non-price discriminating monopoly, bilateral monopoly, natural monopoly, oligopoly, market-leader oligopoly, monopolistic competition, commons, club goods, pure public goods....The characteristics of perfect competition are that:There is a large number of firms, so many that the demand function facing an individual firm is effectively perfectly elasticThe firms produce a uniform, homogenous productThere is a large number of consumers, none of which exercises market power nor prefers one firms' product over any others'The consumers and firms are fully and costlessly informed of all prices, and know the quality and properties of the product.The firms cannot or do not colludeThe consumers cannot or do not colludeThere are zero transaction costsAll firms have the same cost functionAll firms are run by entrepreneurs who seek to maximise their profit after paying or imputing costs to factors at uniform market pricesThere are no barriers to entry or exit from the industryAll factors of production are completely mobile in the long runShort-run and long-run economies of scale are limited in such a way that the firms' short-run and long-run average cost curves are U-shaped.
The perfectly competitive market is an economic anomaly; it does not exist in real life, because of the unreal circumstances that need to occur in perfectly competitive industries. Perfectly competitive markets have so many competing firms, that one firm cannot change the overall market price of the good that the firm is selling. In a perfectly competitive market, there is perfect economic efficiency for each firm. Each firm's demand curves are perfectly elastic (vertical), although the industry's D curve is not. Another characteristic is that the firms MR curve is equivalent to product price is equivalent to the demand curve is equal to total revenue. These are not all of the characteristics of perfect competition, but these are the basic defining features of this market type.A picture of a perfect competitor's cost curves: http://ourtwocents.files.wordpress.com/2008/04/perfect-competition.pngSecond answerNote: it is important to bear in mind that perfect competition is not a real thing. It is an idealised model which is analysed in Economics the way perfectly elastic collisions, point masses, incompressible materials, perfect vacuums, perfect insulators, perfect conductors, massless inextensible strings, Newtonian fluids, and volumes with no gravitational field in them are used in physics. It is an idealised baseline from which real phenomena are expected to deviate because of their idiosyncratic features. Also, it is not the only such model: other ideals include perfectly price-discriminating monopoly, market-segmenting monopoly, non-price discriminating monopoly, bilateral monopoly, natural monopoly, oligopoly, market-leader oligopoly, monopolistic competition, commons, club goods, pure public goods....The characteristics of perfect competition are that:There is a large number of firms, so many that the demand function facing an individual firm is effectively perfectly elasticThe firms produce a uniform, homogenous productThere is a large number of consumers, none of which exercises market power nor prefers one firms' product over any others'The consumers and firms are fully and costlessly informed of all prices, and know the quality and properties of the product.The firms cannot or do not colludeThe consumers cannot or do not colludeThere are zero transaction costsAll firms have the same cost functionAll firms are run by entrepreneurs who seek to maximise their profit after paying or imputing costs to factors at uniform market pricesThere are no barriers to entry or exit from the industryAll factors of production are completely mobile in the long runShort-run and long-run economies of scale are limited in such a way that the firms' short-run and long-run average cost curves are U-shaped.
Air masses are described by two basic characteristics. Temperature and moisture, or humidity, are the main characteristics that define an air mass.
Activation, persistence, and intensity are the three basic characteristics associated with motivation.
1.) Perfect Competition2.) Imperfect Competition3.) Oligopoly4.) MonopolyIn economics, market structure (also known as the number of firms producing identical products.)Monopolistic competition, also called competitive market, where there are a large number of firms, each having a small proportion of the market share and slightly differentiated products.Oligopoly, in which a market is dominated by a small number of firms that together control the majority of the market share.Monopoly, where there is only one provider of a product or service.Perfect competition is a theoretical market structure that features unlimited contestability (or no barriers to entry), an unlimited number of producers and consumers, and a perfectly elastic demand curve.
how does the market mechanism solve the basic problem of free market economy?
Organization.