 Perfect CompetitionP. J. Curwen Chapter Chapter 2 in The Theory of the Firm, 1976, pp 8-17 from Palgrave Macmillan Abstract: Abstract In order to construct a model of how firms behave under perfectly competitive conditions we need to begin by making the following set of assumptions: (a) the typical unit of production is a small firm which is both owned and managed by an entrepreneur, and no single firm supplies more than a very small share of total demand for a product; (b) the products of all firms supplying the market are regarded by potential customers as very close substitutes for each other;1 (c) an individual firm is able to alter its output level without this having any effect upon the price of the product which it sells. The firm is a passive price-taker; (d) the industry displays freedom of entry and exit in the sense that there are no impediments upon the ability either of new firms to enter the industry or of existing firms to leave the industry; (e) the sole objective of a firm is to maximise its profits; (f) in order to attain its profit-maximising output a firm equates its marginal cost with its marginal revenue; and (g) both firms and potential customers make decisions in full knowledge of all information which is relevant to those decisions. Keywords: Equilibrium Price; Demand Curve; Traditional Theory; Supply Curve; Individual Firm (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-15645-0_2 Ordering information: This item can be ordered from DOI: 10.1007/978-1-349-15645-0_2 Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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