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Managerial Economics and Strategy, 2/e
book

Managerial Economics and Strategy, 2/e

by Jeffrey M. Perloff, James A. Brander
February 2016
Beginner to intermediate content levelBeginner to intermediate
500 pages
33h 40m
English
Pearson
Content preview from Managerial Economics and Strategy, 2/e

8.1 Perfect Competition

Perfect competition is a market structure in which buyers and sellers are price takers. A price-taking firm cannot affect the market price for the product it sells. A firm is a price taker if it faces a demand curve for its product that is horizontal at the market price. That is, it can sell as much as it wants at the market price, so it has no incentive to lower its price to gain more sales. If it raises its price even slightly, it sells nothing as consumers can buy the product for less elsewhere. Thus, the firm sells its product at the market price. In this section, we discuss how the characteristics of a perfectly competitive market lead to price taking and how much a market can deviate from these characteristics and ...

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Publisher Resources

ISBN: 9780134472553