- Low barriers of entry and exit
- Perfect knowledge about product quality, price, and cost
- No single buyer or seller is large enough to influence the market price
- Large no. of sellers with Homogeneous products
- Each sellers has small market shares
- Elastic (horizontal) demand curve
- Price is determined by the market’s supply and demand
Also know as Price Taker
The seller can only take the market price as their selling price but not higher or lower.
Total revenue (TR)
TR = P × Q, where P = price and Q = quantity sold.
Marginal revenue (MR)
The increase in total revenue for production of one more unit always equal to the market price for a price taker.
MR = P
Marginal costs (MC)
Depend on the quantity produced
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