Identical firms
Topic: Markets, Equilibrium and Government Intervention · NCERT: Class 12, Ch 5 "Market Equilibrium"
Meaning
Identical firms are firms with the same cost structure. That means they have the same cost curves, the same minimum average cost (min AC) and the same supply curve. The Class 12 model of free entry and exit assumes this. Because every firm is the same, all firms break even at the same price, which is min AC. It also means each firm produces the same amount, so you can count the firms with n₀ = q₀ / q₀f: market output divided by one firm's output.
Example
In the Class 12 wheat case, each firm supplies qf = 10 + p for p ≥ 20. Since all firms share this supply rule, each sells 30 kg at ₹20. A market demand of 180 kg is therefore met by exactly 6 firms.
Don't confuse with
- Homogeneous product: this means buyers see every firm's goods as the same. Identical firms is about firms having the same costs. A market can have one without the other.