Topic

Pure Competition in the Short Run

Instructions

Read pages 222 and 224-230 of Economics.

Consider the following as you read:

What is the difference between a market structure and a characteristic of market structure?
What are the main characteristics of the four basic market models?
How can purely competitive firms use the total-revenue-total-cost approach to maximize profits or minimize losses in the short run

Answer preview

Market structure is defined as the degree and nature of competition that exists in the marketplace for products and services. Notably, the market structures both for products markets and service are usually ascertained by the competition nature prevailing in a certain market. It is clear that market structures offer a model that compares the real markets characteristics. The characteristic of market is comprised of buyers and sellers, an area, one commodity, free competition and one price. The market for a certain good is defined as the entire area in which the sellers and buyers of that good are spread and there is free competition that similar price for the good prevails in the whole area.

Word count: 221