![]() In addition to making output and pricing decisions, firms must also determine how much of each input to demand. Labor Demand and Supply in a Perfectly Competitive Market Labor Demand and Supply in a Perfectly Competitive Market.Equilibrium in a Perfectly Competitive Market.Monopolistic Competition in the Long-run.Demand in a Perfectly Competitive Market.Classical and Keynesian Theories: Output, Employment. ![]() Baumol writes: The supply curve is, strictly speaking, a concept which is usually relevant only for the case of pure (or perfect) competition… The reason for this lies in its definition-the supply curve is designed to answer questions of the form, “How much will firm A supply if it encounters a price which is fixed at P dollars.” But such a question is most relevant to the behaviour of firms that actually deal with prices over whose determination they exercise no influence. For a firm under imperfect competition, it is not a question of adjusting output or supply at a given price but of choosing price-output combination which maximize its profits.Ĭommenting on the relevance of supply curve, Prof. In fact, under various forms of imperfect competition, a firm sets its own price. Under various forms of imperfect competition, an individual firm does not take the price as given and is not a mere quantity adjuster. This is because the notion of supply curve refers to the question as to how much quantities of a commodity a firm will supply at various given prices. Therefore, it is quite inapplicable to the causes of imperfect competition, monopolistic competition, monopoly and oligopoly.
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