PRIN OF MICROECONOMICS
2nd Edition
ISBN: 9780393914085
Author: coppock
Publisher: Norton, W. W. & Company, Inc.
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Chapter 9, Problem 1QR
To determine
The necessary conditions for a
Expert Solution & Answer
Explanation of Solution
Perfect competition is a market structure in which large number of sellers sells a homogeneous product. The important characteristics of a perfectly competitive market include large number of buyers and sellers, identical products, unitary price, freedom of entry and exit, absence of transportation cost, and perfect knowledge about the market. These are the necessary conditions for the existence of a perfectly competitive market. Identical products and large number of sellers make perfect substitute for the goods in the market, this will drive price down to the same level.
Economics Concept Introduction
Perfect competition: Perfect competition is a market structure in which large number of sellers offers a homogeneous product.
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