write about 3 vital conclusions of perfect competitive market.
Dear Student,
The 3 vital conclusions of a perfectly competitive market are :
(i) A Large number of buyers and sellers :
The number of buyers and sellers is so large that no single buyer or seller can influence the price of the product. Therefore, the industry is the price maker and the firm is the price taker.
(ii) Homogeneous Product :
The product sold in the perfectly competitive market is identical in all respects - color,quantity, design,etc..They are perfect substitutes of one another. Therefore, all the firms will have to charge the same price for the product.
(iii) No entry and exit barriers :
New firms attracted by the profit are free to enter the market at anytime. Likewise, loss making firms are free to exit the market at any time. This feature implies that no firm in the industry can earn abnormal profits.
Regards,
The 3 vital conclusions of a perfectly competitive market are :
(i) A Large number of buyers and sellers :
The number of buyers and sellers is so large that no single buyer or seller can influence the price of the product. Therefore, the industry is the price maker and the firm is the price taker.
(ii) Homogeneous Product :
The product sold in the perfectly competitive market is identical in all respects - color,quantity, design,etc..They are perfect substitutes of one another. Therefore, all the firms will have to charge the same price for the product.
(iii) No entry and exit barriers :
New firms attracted by the profit are free to enter the market at anytime. Likewise, loss making firms are free to exit the market at any time. This feature implies that no firm in the industry can earn abnormal profits.
Regards,