Authors libby rittenberg 471

KEY TAKEAWAYS


The central characteristic of the model of perfect competition is the
fact that price is determined by the interaction of demand and supply;
buyers and sellers are price takers.



The model assumes: a large number of firms producing identical
(homogeneous) goods or services, a large number of buyers and
sellers, easy entry and exit in the industry, and complete information
about prices in the market.



The model of perfect competition underlies the model of demand and
supply.

TRY IT!
Which of the following goods and services are likely produced in a
perfectly competitive industry? Relate your answer to the
assumptions of the model of perfect competition.
1. International express mail service
2. Corn
3. Athletic shoes

Case in Point: Entering and Exiting the
Burkha Industry
Muhammed Ibrahim Islamadin was driving a cab in Kabul, Afghanistan,
when the Taliban took over the country. He foresaw the repression that

would follow and sensed an opportunity.
He sold his taxicab and set up a shop for sewing and selling burkhas, the
garments required of all women under the Taliban’s rule. Mr. Islamadin
had an easy task selling, as women caught outdoors with exposed skin
Attributed to Libby Rittenberg and Timothy Tregarthen
Saylor URL: />
Saylor.org

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