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Costs of Production - The Ohio State University

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... Now let’s explore what happens when market conditions change. 3. Suppose that the market demand for the product decreases by 10% a) Derive the new market demand equation (from the function in 2, above). b) Use the relevant information from the market supply schedule (1, above), to derive an estimat ...
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Perfect competition

In economic theory, perfect competition (sometimes called pure competition) describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. Because the conditions for perfect competition are strict, there are few if any perfectly competitive markets. Still, buyers and sellers in some auction-type markets, say for commodities or some financial assets, may approximate the concept. As a Pareto efficient allocation of economic resources, perfect competition serves as a natural benchmark against which to contrast other market structures.
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