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Essay text:
the prices and wages are determined by the market and the firm is so small relative to the size of the market that they can have no influence over the market price. For a market to be perfectly competitive there are certain conditions that have to be met.
The first set of conditions for perfect competition applies to the market structure. There are many small buyers and firms (suppliers), where none have an influence over the market price as they are small relative to the market as a whole. This means that each of the suppliers in the industry is a price taker. One firm’s change in output will not affect the total market supply...
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