All of the following are characteristics of perfectly competitive markets except
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If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked. 2023 Curriculum CFA Program Level I Economics IntroductionThe purpose of this reading is to build an understanding of the importance of market structure. As different market structures result in different sets of choices facing a firm’s decision makers, an understanding of market structure is a powerful tool in analyzing issues such as a firm’s pricing of its products and, more broadly, its potential to increase profitability. In the long run, a firm’s profitability will be determined by the forces associated with the market structure within which it operates. In a highly competitive market, long-run profits will be driven down by the forces of competition. In less competitive markets, large profits are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure will aid the financial analyst in determining firms’ short- and long-term prospects. Section 2 introduces the analysis of market structures. The section addresses questions such as: What determines the degree of competition associated with each market structure? Given the degree of competition associated with each market structure, what decisions are left to the management team developing corporate strategy? How does a chosen pricing and output strategy evolve into specific decisions that affect the profitability of the firm? The answers to these questions are related to the forces of the market structure within which the firm operates. Sections 3, 4, 5, and 6 analyze demand, supply, optimal price and output, and factors affecting long-run equilibrium for perfect competition, monopolistic competition, oligopoly, and pure monopoly, respectively. Section 7 reviews techniques for identifying the various forms of market structure. For example, there are accepted measures of market concentration that are used by regulators of financial institutions to judge whether or not a planned merger or acquisition will harm the competitive nature of regional banking markets. Financial analysts should be able to identify the type of market structure a firm is operating within. Each different structure implies a different long-run sustainability of profits. A summary and practice problems conclude the reading. Learning OutcomesThe member should be able to:
SummaryIn this reading, we have surveyed how economists classify market structures. We have analyzed the distinctions between the different structures that are important for understanding demand and supply relations, optimal price and output, and the factors affecting long-run profitability. We also provided guidelines for identifying market structure in practice. Among our conclusions are the following:
Which of the following are characteristic of a perfect competition except?All of the following are characteristics of Perfect Competition except: Ease of entry and exit.
Which of the following are characteristics of a perfectly competitive market?The three primary characteristics of perfect competition are (1) no company holds a substantial market share, (2) the industry output is standardized, and (3) there is freedom of entry and exit.
What are not characteristics of a perfectly competitive market?Answer and Explanation: Product differentiation is not a characteristic of perfect competition. Price taking behavior, freedom of entry or exit for buyers, and a large number of buyers and sellers are characteristics of perfect competition.
Which of the following are characteristics of perfectly competitive markets quizlet?(The characteristics of a perfectly competitive firms are: price takers, experience no barriers to entry, sell identical products, and face a perfectly elastic (horizontal) demand curve.)
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