tailieunhanh - Hướng dẫn ôn thi CFA Level 1 2010 Phần 19

Tài liệu hướng dẫn ôn thi CFA Level 1 phần Economics: Monetary and Fiscal Analysis | The following is a review of the Economics principles designed to address the learning outcome statements set forth by CFA Institute . This topic is also covered in Perfect Competition Study Session 5 Exam Focus You should be able to explain what a price-taker market is and how price and output are determined in the short run and the long run. Pay special attention to the relationship between marginal cost marginal revenue price and output for a perfectly competitive firm. Know how the concept of economic profit applies to perfect competition. Finally you should be able to explain the adjustments that take place in response to changes in industry demand. A good understanding of the case of perfect competition is important because this is the model of economically efficient markets to which we will compare other market structures in the reviews that follow. LOS Describe the characteristics of perfect competition explain why companies in a perfectly competitive market are price takers and differentiate between market and company demand curves. Price takers are firms that face horizontal perfectly elastic demand curves. They can sell all of their output at the prevailing market price but if they set their output price higher than the market price they would sell nothing. They are price takers because they take the market price as given and do not have to devote any resources to discovering the best price at which to sell their product. A price-taker market is equivalent to a perfectly competitive market. Perfect competition assumes the following All the firms in the market produce identical products. There is a large number of independent firms. Each seller is small relative to the size of the total market. There are no barriers to entry or exit. Producer firms in perfect competition have no influence over market price. Market supply and demand determine price. As illustrated in Figure 1 the individual firm s demand schedule is perfectly elastic horizontal . 2009