00:01
So here there's a small mistake, i think, in the question, right? when we're thinking of perfect competition, we're thinking of two things, right? identical products with large number of buyers and sellers.
00:16
Absolutely, right? that is part of competition.
00:22
If there is only one seller, of course, we know that's monopoly.
00:26
But in general, you should think that competition requires competitors, right? it's not competition if there's no other competitors.
00:34
You need a lot of people buying and selling to compete with each other.
00:39
The identical products is important because if they're not identical products, then we're back to small numbers of buyers and sellers, right? if i'm the only person who sells my product, by definition, it can't be a perfectly competitive market.
00:52
My product is different than everyone else's.
00:55
But the second part here is that sellers of goods, influence the prevailing price, giving them the role of price in the marketplace.
01:14
There's some truth to hear and some false to hear, right? so what this is referring to, it's the ideal that imperfect competition, price is equal to marginal cost.
01:26
Sometimes you've seen a perfectly competitive market that looks like this, right? demand and supply, right? so yes, there's yes, price is effectively set by firm costs, but no firms cannot pick price.
01:52
I don't want you to be misled here to think that firms can actually choose the price they want.
01:58
In perfect competition, there's a vicious competition over price...