micro economics

posted by .

Why are the firms in the perfectly competitve markets unable to control the prices of the goods that they produce?

  • micro economics -

    Because under a perfectly competitive market, there are lots of other producers trying to sell the same thing. Take for example a wheat farmer, and say the market price is $10 per bushel. What if the farmer charged $10.10, how much would he sell? Answer is zero, nobody would pay 10.10 when they could buy all they want at $10.00. Well, what if he charged $9.90. He would sell out of course and then feel like a schlemiel, because he could have just as easily sold all of his wheat for $10.

    Under the market price in a perfectly competitivie market, a person can immediately buy or sell at that price.

  • micro economics -

    Explained well, thanks.

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. Economics

    You should start a new post instead of adding on to an existing post. That said, I would go with A Which of the following statements is true?
  2. Economics

    The circular flow of economic activity can be summed up as: A. households earn money by selling their factors of production to firms in the factor market and use that money to buy goods and services from firms in the product market. …
  3. Microconomics [URGENT]

    In the short run, do perfectly competitive firms have a loss of profit or a break even when MC = AVC?
  4. Microeconomics

    What keeps oligopolies from becoming a monopoly?
  5. micro economics

    if a few large firms were broken down into a lot of smaller firms how would this effect the supply and demand
  6. economics

    Suppose there are two goods. The demand for good 1 is q1=a-bp1+ep2 and the demand for good two is q2=a-bp2+ep1. a and b are strictly positive, |e|<b (1)Compute the optimal prices, and the Lerner index and inverse elasticity of demand …
  7. college economics

    Suppose there are two goods. The demand for good 1 is q1=a-bp1+ep2 and the demand for good two is q2=a-bp2+ep1. a and b are strictly positive, |e|<b (1)Compute the optimal prices, and the Lerner index and inverse elasticity of demand …
  8. Microeconomics

    I'm just confused about this one concept. My lecture notes say the following: Markets for goods + services: - firms sell - households buy Markets for Factors of Production: - Households sell - Firms buy I don't understand the "factors …
  9. Economics

    The spirit of equating marginal cost with marginal revenue is not held by a.perfectly competitive firms. b.oligopolistic firms. c.perfectly competitive firms and oligopolistic firms. d.none of the statements associated with this question …
  10. Managerial Economics

    A monopoly can produce any level of output it wishes at a constant marginal (and average) cost of $5 per unit. Assume the monopoly sells its goods in two different markets separated by some distance. The demand curve in the first market …

More Similar Questions