Market Basics
What is the market structure where many sellers offer identical products?
Perfect Competition
What type of entry and exit do perfectly competitive markets have?
Free entry and exit
Name one Belizean product that fits perfect competition.
Coconut water, fruits, or local fish.
What shape is the demand curve for a perfectly competitive firm?
Perfectly elastic (horizontal line).
In the short run, can firms earn profit?
Yes, possible if they’re more efficient.
In perfect competition, what determines the price?
Supply and Demand
What does “perfect information” mean?
Everyone knows prices and product details.
Why are roadside fruit vendors a good example?
They sell similar products at similar prices.
What happens if a firm charges above the market price?
Consumers go to another seller.
In the long run, what kind of profit do firms make?
Normal profit or zero economic profit.
Are firms in perfect competition price makers or price takers?
Price takers
Who controls the market price?
No one; all firms accept the market price.
If one coconut seller raises prices, what happens?
Customers buy from another seller.
What keeps prices stable in perfect competition?
Market supply and demand balance.
Why do profits disappear in the long run?
New firms enter, increasing supply and lowering prices.
What does “identical products” mean?
Goods are the same, no brand differences
Is there government intervention in perfect competition?
No, there’s none.
What feature of Belize’s local markets shows free entry?
Anyone can start selling fruits or coconuts easily.
According to the video, what ensures fairness in perfect competition?
Free competition among many sellers.
What happens to inefficient firms in the long run?
They exit the market.
Why is perfect competition considered the “ideal” market?
It shows how fair and efficient markets can be when no one controls prices.
What kind of products are sold in perfect competition?
Identical or homogeneous products.
What happens to prices when more fish vendors start selling?
Supply increases and prices go down.
What’s one main lesson from the video about perfect competition?
It promotes fairness and efficiency by letting prices adjust freely.
What type of efficiency does perfect competition achieve in the long run?
Productive and allocative efficiency.