Perfect+Competition+-&nbsp;Be+able+to+apply+the+model

=Characteristics of Perfect Competition=


 * Many sellers
 * Tiny market share for individual firms
 * Homogeneous product
 * No barriers to entry
 * Perfect consumer information

Perfect competition describes a market in which there are a large number of sellers who each hold very little market power. Sellers in this type of market are considered price takers which means that they can sell as much or as little of the product as they want, but must do so at the current market price. Examples of this type of market include most basic commodity markets such as agriculture products or natural resources like oil or lumber.

=Perfect Competition and Medical Care=

Perfection competition can be applied to the market of medical services through the use of the supply and demand model, however many of the assumptions of perfect competition must be relaxed.

=Test Questions=

1. Which of the following are characteristics of perfect competition? A. Large number of sellers B. Small market share C. No barriers to entry D. Perfect information E. All of the above

Answer: E.

2. T or F? Sellers in perfect competition are also know as price takers.

Answer: True.

3. Which of the following would **not** be a product whose market fits the model of perfect competition? A. Soybeans B. Automobiles C. Corn D. Timber

Answer: B.

=Sources=

Santerre, R., & Neun, S. (2007). //Health economics//.Mason: Thomson South-Western.