Each orange that is there is identical-there is no way to distinguish which farmer produced each one. Think about when you walk into the produce section of a grocery store and purchase an orange. One of the best examples of a perfectly competitive market is the agriculture industry. Products sold are identical: In perfect competition, the various products that are sold are identical.In long-run equilibrium, price is equal to marginal cost and the minimum ATC. Since firms are free to enter or exit in response to potential profit, or lack thereof, they cannot make an economic profit and will only break even. Firms break even in the long-run: This occurs because of the lack of barriers to entry or exit. In perfect competition, there are very low barriers of entry so it is very easy for firms to enter or exit as they see fit. These can include things like geographic location, control over resources, government regulations and protections, technology, common use, and economies of scale. Low barriers to entry: Barriers to entry are obstacles that can make it difficult for new firms to join an industry and compete with other firms.A firm would not want to lower their price if they can get a higher price for their product that is set by the market. A firm would not want to raise its price because consumers would just buy from one of the many competitive firms that are selling the product at a lower price. There is no incentive to deviate from the price set by the market. All firms must sell their output at the same price set by supply and demand in the industry. Firms are "Price Takers": This means that firms have no control over the price at which they sell their goods in the market.Many, small firms in the industry: In perfect competition, there are hundreds or thousands of small firms that all sell identical products.Market structures are distinctive based on certain characteristics including the number of firms that are in them, barriers to entry and exit, control over price, and whether the goods are identical or differentiated. The four main market structures are perfect competition, monopoly, monopolistic competition, and oligopoly. There are several market structures that we will look at. In economics, every good or service is sold within a market structure.
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