Why is the perfect competition often used as a benchmark? Question 3 options: The perfect competition model is more frequently observed in the real world compared to other market models It provides a useful comparison to markets that operate in more complex, real-world conditions. It accounts for a variety of issues like pollution, inventions of new technology, poverty, and government programs that other models do not account for. In the real world, all markets are perfectly competitive, so this model allows us to compare them to one another.

Perfect competition is a market where there are many buyers and sellers. The equilibrium price and output are determined when the market demand is equal to the market supply. Thus, the firms are price takers and not price makers. Goods in this market are homogeneous in nature. Also, firms are free to enter and exit the market.From the above analysis, we can say that the perfect competition market is based on assumptions that help to analyze the market structure of the real world. This is because the real world market is more complex in nature and required parameters to understand the efficiency. To understand the working of the complexity of the real-world market, perfect market competition helps to compare the performance. This happens as perfect competition, in the long run, achieves market efficiency that helps to analyze the performance of other markets and helps to understand whether the price and output determination of the real-world market is efficient or not.Answer) It provides a useful comparison to markets that operate in more complex, real-world conditions.

Answered: Why is the perfect competition often…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Why is the perfect competition often used as a benchmark?

Question 3 options:

	The perfect competition model is more frequently observed in the real world compared to other market models
	It provides a useful comparison to markets that operate in more complex, real-world conditions.
	It accounts for a variety of issues like pollution, inventions of new technology, poverty, and government programs that other models do not account for.
	In the real world, all markets are perfectly competitive, so this model allows us to compare them to one another.

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