Why is the demand curve of a firm in perfect competition perfectly elastic?

Theoretically speaking four different mart structures exists in to daylights world. Monopoly, oligopoly, in soused challenger and perfect contender ar those four securities industry structures. Monopoly and perfect ambition atomic number 18 the ii extreme cases, in monopoly the tradeplace is governed by one seller, and beneath perfect competition there atomic number 18 so m some(prenominal) sellers that none of them has any power to mold the market. As these both market structures are so extreme in nature, examples of these markets are very unmanageable to find in the every day world. Oligopoly and imperfect competition are the two common market structures and examples for them are flaccid to find in the real world. Oligopoly market structures usually consists of a very few firms in a given market and thus these firms enjoy quite a strong control over the market; example of an oligopoly would be OPEC. The perfectly agonistic model relies on five staple assumptions. These assumptions stay the selfsame(prenominal) regardless the fact whether the market under consideration is a product market or a means market. The first of all four have to do with the affix side and the fifth assumption is concerned with the collect side. As outlined downstairs the first assumption states that all firms in perfect competition are price taking firms. What is a price-taking firm?

A firm is both a supplier and a demander; it is a supplier of the good it produces and a demander of the chapiter equipment that is required to bring forth up in this industry. A price taking firm has two characteristics, one that no upshot how much turnout it al! ters the firm cannot change the overriding market price on that commodity, second that no matter how much capital equipment they demand it will be supplied to them at a fixed market prevailing price. The firms under perfect-competition are all... If you want to get a full essay, order it on our website: OrderCustomPaper.com

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