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

Theoretically speaking four different mart structures exists in to twenty-four hour periods world. Monopoly, oligopoly, in soused challenger and perfect contender ar those four securities industry structures. Monopoly and perfect ambition ar the devil extreme cases, in monopoly the food commercialize is governed by one seller, and below perfect competition there be 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 basal assumptions. Thes e assumptions stay the selfsame(prenominal) regardless the fact whether the market under love is a product market or a factor out market. The first of all four have to do with the cater 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 great equipment that is required to bring forth up in this industry. A price taking firm has two characteristics, o ne that no number how much turnout it alte! rs the firm cannot change the common 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: BestEssayCheap.com

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