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Indeed it is. A competitive market means that there are a lot of companies that sell the same product. With this conditions, if a company rise the price, consumers will easily find another company, losing all profits.
Therefore a firm cannot control the price in a competitive market, it has to take the market price.
What else can I help you with?
A purely competitive firm is precluded from making economic profit in the long run because?
it is a price taker
Why a firm in a purely competitive labor market a wage taker?
This is due to the fact that their are other firms competing to get that same labour, therefore making them a wage taker.
In long run equilibrium a purely competitive firm will operate where price is?
nn
Why is a perfectly competitive firm considered a price taker?
A perfectly competitive firm is considered a price taker because it has no control over the price of the goods or services it sells. In a perfectly competitive market, there are many buyers and sellers, and each firm's output is a small fraction of the total market supply, so individual firms must accept the market price set by supply and demand forces.
The representative firm in a purely competitive industry?
will
A purely competitive firm is precluded from making economic profit in the long run because?
it is a price taker
Why a firm in a purely competitive labor market a wage taker?
This is due to the fact that their are other firms competing to get that same labour, therefore making them a wage taker.
In long run equilibrium a purely competitive firm will operate where price is?
nn
Why is a perfectly competitive firm considered a price taker?
A perfectly competitive firm is considered a price taker because it has no control over the price of the goods or services it sells. In a perfectly competitive market, there are many buyers and sellers, and each firm's output is a small fraction of the total market supply, so individual firms must accept the market price set by supply and demand forces.
The representative firm in a purely competitive industry?
will
What characteristic of a perfectly competitive firm that causes it to be a price taker?
A perfectly competitive firm is a price taker because it operates in a market with many buyers and sellers, where no single firm can influence the market price due to the homogeneity of the products offered. Additionally, the presence of perfect information allows consumers to easily compare prices, leading firms to accept the market price determined by supply and demand. Since firms in this market structure produce identical products, they must sell at the prevailing market price to remain competitive, as charging a higher price would result in losing customers to competitors.
Is it easier for a perfectly competitive firm or for a monopolist to determine price?
A monopolist has more control over pricing because it is the sole provider of a good or service, allowing it to set prices based on its desired profit maximization strategy. In contrast, a perfectly competitive firm is a price taker, meaning it must accept the market price determined by the overall supply and demand. Therefore, it is generally easier for a monopolist to determine price compared to a perfectly competitive firm.
Why producers are price takers and not price makers?
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.
How is a monopolist different from a perfectly competitive firm in terms of market structure and pricing behavior?
A monopolist is a single seller in the market, while a perfectly competitive firm is one of many sellers. A monopolist has the power to set prices, while a perfectly competitive firm is a price taker and must accept the market price. This difference in market structure leads to monopolists typically charging higher prices and producing less output compared to perfectly competitive firms.
Can a perfectly competitive firm set a price for its products that is above marginal cost?
A perfectly competitive firm would set its prices at a perfectly competitive price.
Explain why perfect competition may result in allocative efficiency?
Because in a perfectly competitive market, resources are used perfectly efficiently (excuse the grammar). A purely competitive market has very many peculiar features. One of them is that every firm is a price taker. This means they cannot set the price, so they must be as efficient as the most efficient competitor or they will be out-priced. This results in inefficient firms going out of business and only the most efficient staying alive.
Profits encourage entry into purely competitive industries and losses encourage exit from purely competitive industries because?
When profits are zero, the firm is earning sufficient revenue to cover the opportunity cost.
