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REALISM OF PERFECT COMPETITION: Perfect competition is an idealized market structure that does NOT exist in the real world. While some real world industries might come relatively close to a one or two of the four key characteristics of perfect competition, none matches all four sufficiently that we can declare a perfectly competitively industry. Some industries come close on the large number of small firms and the identical product characteristics. A few industries have relatively good, although not perfect, information about prices and technology. However, almost all industries fall far short of the perfect mobility characteristics.
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Lesson 23: Factor Market Equilibrium | Unit 4: Monopsony
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Page: 16 of 24
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- A definition of monopsony:
- Monopsony is a market structure characterized by a single buyer.
- The key characteristics of monopsony are:
- Only Buyer
- Entry Barriers
- Limited Substitutes
- These characteristics of monopsony lead to two important features:
- Supply Curve
- Marginal Factor Cost
- The positively-sloped factor supply curve facing the firm and the corresponding marginal factor cost curve are illustrated in this diagram.
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ASSUMPTIONS, PRODUCTION POSSIBILITIES The four key assumptions underlying production possibilities analysis are: (1) resources are used to produce one or both of only two goods, (2) the quantities of the resources do not change, (3) technology and production techniques do not change, and (4) resources are used in a technically efficient way.
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ORANGE REBELOON
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Today, you are likely to spend a great deal of time watching the shopping channel wanting to buy either an extra large beach blanket or a large flower pot shaped like a Greek urn. Be on the lookout for a thesaurus filled with typos.
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Post WWI induced hyperinflation in German in the early 1900s raised prices by 726 million times from 1918 to 1923.
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"The only place success comes before work is in the dictionary. " -- Vince Lombardi
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CBI
Confederation of British Industry
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