1. Assumptions of a Perfectly Competitive Market By Delcie Peters

2. In a perfectly competitive market, no participants are large enough to have market power..

3. There are six conditions we covered in class…

4. Private Good Excludable Once consumed, this good may not be available for others Rival in consumption Satisfies individual want Prevents consumption at the same time

5. Examples of private goods: clothing and food

6. Homogeneous Good All units are the same Physically identical or… Viewed as identical by buyers

7. Examples of homogeneous good: metal & barrel of oil

8. Many Buyers, Many Sellers Price is essentially set by the market A seller may reason: “If I charge more than market price, customers will know they can get a better deal somewhere else. They will then buy from the competition, and I won’t have customers.”

9. Perfect Property Rights Perfectly defined Transferrable (legal and protected) Enforceable

10. No Barriers to Entry or Exit It is relatively easy for a business to enter or exit in a perfectly competitive market. Minimal fees and regulations

11. Perfect Information Quality and price of a product are assumed to be known by all consumers and producers.

12. Sources www.businessdictionary.com www.faculty.lebow.drexel.edu www.glossary.com www.wikipedia.com Econ 202 Notes