1. In the long-run, economic profits or losses will be eliminated through firms entering or leaving the industry. 2. Unless their market positions are very secure, firms will practice "limit pricing" to forestall other firms entering the industry. 3. Static efficiency is assured in the long run in this market. 4. The actions of one seller in the market significantly impacts other sellers. 5. Firms often exhibit "price leadership" behavior where one firms sets a price with all other firms matching the price. 6. Firms often compete vigorously on every aspect of the marketing mix (price, product, promotion, distribution) EXCEPT price. 7. This market structure is likely to be conducive to dynamic efficiency.

1. In the long-run, economic profits or losses will be eliminated through firms entering or leaving the industry. 2. Unless their market positions are very secure, firms will practice "limit pricing" to forestall other firms entering the industry. 3. Static efficiency is assured in the long run in this market. 4. The actions of one seller in the market significantly impacts other sellers. 5. Firms often exhibit "price leadership" behavior where one firms sets a price with all other firms matching the price. 6. Firms often compete vigorously on every aspect of the marketing mix (price, product, promotion, distribution) EXCEPT price. 7. This market structure is likely to be conducive to dynamic efficiency.

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter23: Price-searcher Markets With Low Entry Barriers

Section: Chapter Questions

Problem 15CQ

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