What is pure or perfect competition? Define and discuss.

You read in a business magazine that farmers are reaping high profits. With the theory of perfect competition in mind, what do you expect to happen over time (in the long run) to each of the following?  The profits of farmers based on what happens to the price, what do you think will happen to the profits earned by the firms/farmers that previously existed in the market?

Can you think of a product that meets at least most of the criteria required for a perfectly competitive market? Which criteria does it fail to meet?

explain how the costs of the firm are calculated, and the way that prices are determined in perfect competition

Assuming that the market for cigarettes is in perfect competition, what does allocative and productive efficiency imply in this case? What does it not imply?

2 O connect Micro- Perfect Competition Mc Graw Hill TUI CUIII! There are only a few sellers of corn in the market. 3 Economics Mentor Oops -- this isn't correct. Corn is a product produced globally. There are thousands, if not hundreds of thousands, of individual farmers. Correct Answer: There are many sellers (and, of course, many buyers). Kim Is the corn that you produce different from your competitors? What kind of product do you sell? Undifferentiated (homogeneous) Differences exist (heterogeneous) esc K James Submit D →> C

Which industry approximates the perfect competition among the following?     A. Pharmaceuticals     B. Boutiques     C. Precious metals     D. airlines