Ch.+7.1

Ch. 7.1 Notes & questions #1-5

Questions
 * Perfect competition- a market structure in which a large number of firms all produce the same product
 * 4 conditions for perfect competition
 * 1. Many buyers and sellers participate competition
 * 2. Sellers offer identical products
 * 3. Buyers and sellers are well informed about products
 * 4. Sellers are able to enter and exit market freely
 * Perfectly competitive markets require many participants on both the buying and the selling sides
 * No individual can be powerful enough to buy or sell enough goods to influence the total market quantity or the market price
 * Commodity- a product that is the same no matter who produces it, such as petroleum notebook paper or milk
 * Barrier to entry- any factor that makes it difficult for a new firm to enter a market
 * Imperfect competition- a market structure that does not meet the conditions of perfect competition
 * Start-up costs- the expenses a firm must pay before it can begin to produce and sell goods

B. C. G.
 * 1) Large number of buyers and sellers in the market, Identical products, Act independently, Well informed consumer, Ease of entry into market. An example would be someone starting theirnon business of hats.
 * 2) Start-up costs discourage entrepreneurs from entering the market because it is risky to take out loan.
 * 3) Two examples of barrier to entry in the magazine market would be the cost of paper and print for the magazine.
 * 4) Because they have chosen to work this way it is possible because these are the only companies in the market for a certain product or service, allowing for maximum financial benefit
 * 5) A.