Title: Differences Between Long Run And Short Run Vs. Pure Competition | Cram
Headings: Differences Between Long Run And Short Run Vs. Pure Competition
Differences Between Long Run And Short Run Vs. Pure Competition
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Content: In the oligopoly market, more than one firm can collude thereby restricting supply in order to ensure the price of the product to remain high to ensure all of the firms in the industry achieve an economic profit . The same principle applies in the case of a duopoly market.… Read More
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Perfect Competition
The assumption of the free flow of information, and no pronounced barriers to entry means that innovations will right away be copied by all competitors so that in due course individual firms will not find it valuable to innovate. Cost effectiveness of the firms in the industry. Pure competition is allocative efficient because marginal revenue equals marginal l cost (P = MC), and is productively efficient because average costs are minimized. Practical examples of firms in perfect competition The assumptions of any perfectly competitive market are obviously at variance with the conditions which actually exist in real world markets. Some markets roughly conform to individual expectations, for example, the stock exchange is characterized by a fairly free-flow of information but the information requires expertise to comprehend.… Read More
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