Ex 5. Answer the questions and do the assignments. 1. What does the notion “competition” signify?

1. What does the notion “competition” signify?

2. Enumerate the features characterizing a perfectly competitive industry. Expand on each.

3. Is perfect competition economically efficient? In what ways?

4. What does contestability theory imply?

5. Show the difference between perfect competition and contestability.

Ex 6.Find in the text above words or phrases that mean:

a. the way in which a market is organized;

b. a type of market structure that is characterized by few firms andmany buyers, homogenous or differentiated products, difficultmarket entry;

c. an element of market conduct that denotes the ways in which suppliers attempt to distinguish their own product from those ofcompetitors;

d. the efficiency of a market in utilizing scarce resources to meetcustomers' demands for goods and services; that is, how well amarket has contributed to the optimization of economic welfare;

e. a policy concerned with promoting the efficient use of economicresources and protecting the interests of consumers;

f. the addition to total revenue from the sale of one extra unit of output;

g. the money value of a unit of a good, service, asset or factor input;

h. the setting of a price for a product which is based upon the marginalcost of producing and distributing it.