Elements of Numerical Mathematical Economics with Excel

6.10. Perfect competitive markets: short-run, long-run supply curves and market equilibrium

The main features of the perfect competition markets can be summarized as follows:

1. • the demand related to the output of a single firm is horizontal in the co-ordinates space (p, y) and equal to the price; the demand curve is therefore perfectly elastic;
2. • there are many sellers and buyers each one completely independent from the other;
3. • the firms are called price-takers because the consumers are not willing to pay more for the same good, which is also produced by the other firms; the sellers are not able to affect the market price, which is taken as given (see in Section 4.2 the Example 2 regarding the Walrasian tâtonment);
4. • the goods produced ...