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(4 pts) What is the KEY difference between competitive markets and non-competitive markets? What implication does...

  1. (4 pts) What is the KEY difference between competitive markets and non-competitive markets? What implication does that difference have for economic profits? Explain.
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Answer #1

The key difference between the competitive market and the non competitive market is the type of goods they are selling i.e. homogeneous and non homogeneous and entry and exit to the market.

in a competitive market entry and exit is easy and the good are homogeneous that prevents the firm to set his own price and have any control in the market. In a non competitive market, the goods are not homogeneous allowing some control for the firm to set there price and there are no easy entry and exit.

Allowing easy entry will wipe out any profit the firm have in the market as it will attract more and more firm in the market. Having a homogeneous good will again decrease any market powrr.

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