Impact Of The Increasing Number Of Students In UTP From The Economic Viewpoint

13 Pages 3224 Words

the medium size tube, you’re a price taker. The firm, however, is a price maker since it set the price at RM3.80. So, this shows that even the toothpaste industry is highly competitive. It’s not a perfect competitive market. Is a perfectly competitive market, market supply and demand determines the price, both firm and consumer take the market price as given.

The second one is the number of firm is large. Large means sufficiently large so the any one firm’s output compared to the market output is imperceptible and what one firm does has no influence one what other firm do. The next one is no barrier to entry. ‘Barriers to entry’ are any things that prevent other firms from entering a market. They might be legal barriers such as exist when firms acquire a patent to produce a certain product. Barriers might be technological, such as when the minimum efficient scale of

production allows only one firm to produce at the lowest average total cost. Or barriers might be created by social forces, such as when bankers will lend only certain type of people and not to other types. Perfect competition can have no barriers to entry.
The other one is homogenous product which is a product such the each firm’s output is indistinguishable from any other firm’s output. Corn bought by the bushel is relatively homogenous. One kernel is distinguishable from every other kernel. On the other hand, you can buy 30 different brands of many goods, soft drink, for instance: Pepsi, Coke, 7-Up, and so on. Each is slightly different from the other and thus not homogenous. The fifth one is instantaneous exit and entry. Say all the grocery store in your neighbourhood raised their price by 30 percent without their cost having gone up. What would happen in the next week or month? Probably nothing, other than customer place with more shop there until a new store opened in a convenient place with more reasonable price. In a perfect competitive mark...