Microeconomics

Leeds, von Allmen and Schiming

Chapter 9, Perfect Competition

1. Market Structure

   1. Defining the market

      1. Product characteristics

      2. Geography

   2. Number and size distribution of firms and buyers

      1. Monopoly

      2. Oligopoly

      3. Monopolistic Competition

      4. Perfect Competition

2. Assumptions of the Perfect Competition Model

   1. Homogeneous product

   2. Many buyers and sellers

   3. Perfect information

   4. Easy entry and exit

3. Firms as price takers

   1. Market power

   2. Market demand - downward sloping

   3. Price taker's demand - perfectly elastic

4. Short run profit maximization

   1. Normal profit

   2. Total revenue and total cost approach

   3. Marginal Cost and Marginal Revenue

      1. The breakeven point

      2. The shutdown point

      3. The firm's short run supply curve

5. The Long Run

   1. Profit as a signal for entry and exit

   2. Long run supply

   3. Increasing cost, decreasing cost and constant cost