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1 What are the characteristics of a PC firm2 Using Hot Dogs, Grap

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1.What are the characteristics of a PC firm?
2.Using Hot Dogs, Graph the market and the individual
supply, demand and costs for Hot dogs side by side. Make
sure to include the S.R. and L.R profits.
Solution
1.
Perfectly competitive markets exhibit the following
characteristics:
There is perfect knowledge, with no information failure or
time lags. Knowledge is freely available to all participants,
which means that risk-taking is minimal and the role of
theentrepreneur is limited.
There are no barriers to entry into or exit out of the
market.
Firms produce homogeneous, identical, units of output that
are not branded.
Each unit of input, such as units of labour, are also
homogeneous.
No single firm can influence the market price, or market
conditions. The single firm is said to be a price taker,
taking its price from the whole industry.

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1.What are the characteristics of a PC firm? 2.Using Hot Dogs, Graph the market and the individual supply, demand and costs for Hot dogs side by side. Make sure to include the S.R. and L.R profits. Solution 1. Perfectly competitive markets exhibit the following characteristics: There is perfect knowledge, with no information failure or time lags. Knowledge is freely available to all participants, which means that risk-taking is minimal and the role of theentrepreneur is limited. There are no barriers to entry into or exit out of the market. Firms produce homogeneous, identical, units of outp ...
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