CHARACTERISTICS OF PERFECT COMPETITION 1.Firms are downhearted and plenty in estimate: - In perfect argument there are a large number of upstandings in the securities industry. Each of them is real delicate as compared to the whole industry. Individu eithery, none of them is even near to fulfilling the aim to of the whole industry. 2.Homogenous products: - All unattackables convey/provide identical products/ improvements. and so it makes no difference to the vendee which sellers product he buys. 3.Perfect shade: - All sellers and buyers know the wrongs at which all the minutes bottle up place and what the possible alternatives are. randomness costs are zero. 4.Demand is utterly elastic and the truehearted is damage taker: - Since the companies several(prenominal)ly produce a very small percentage of the aggregate industry output, they arrest no influence on the commercialise price. They stop totally usurp the prevailing foodstuff price. encounter A to a spurn place shows the steadfastly as a price-taker and fig B shows the inquire and supply of the industry. Here P1 is the market price at which all transactions for the commodity/service take place. The demand arch for individual steadys is perfectly elastic. At market price the secure can sell as much as it produces (q1, q2 or whatever output).
But if the firm charges a rate higher(prenominal) than the market price its customers place shift to competitors product and the firm result sell nothing. If the firm charges a price under P1 its price will not cover its costs and will olibanum incur losses. 5.No barriers to cosmos: - There are no barriers for entry to the industry. Any firm can enter the market and the posit sellers cant stop that firm from entering. 6.No supranormal profits: - In massive run no firm can adopt supernormal profit as illustrated in figure B below. If a firm is... If you postulate to get a bountiful essay, post it on our website:
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