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Definition: Perfect competition describes a market structure where competition is at its greatest possible level. To make it more clear, a market which exhibits the following characteristics in its structure is said to show perfect competition: 1. Large number of buyers and sellers 2. Homogenous product is produced by every firm 3. Free entry and exit of firms 4. Zero advertising cost 5. Consumers have perfect knowledge about the market and are well aware of any changes in the market. Consumers indulge in rational decision making. 6. All the factors of production, viz. labour, capital, etc, have perfect mobility in the market and are not hindered by any market factors or market forces. 7. No government intervention 8. No transportation costs 9. Each firm earns normal profits and no firms can earn super-normal profits. 10. Every firm is a price taker. It takes the price as decided by the forces of demand and supply. No firm can influence the price of the product. Description: Ideally, perfect competition is a hypothetical situation which cannot possibly exist in a market. However, perfect competition is used as a base to compare with other forms of market structure. No industry exhibits perfect competition in India.
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Which if the following is a characteristic of a competitive price taker market?Which of the following is a characteristic of a competitive price-taker market? There are many firms in the market, each producing a small share of total market output. price searcher will still be able to sell some of its product if it increases its price.
Which of the following is a characteristic of a price taker?Price takers must accept the market price as their selling price. They don't have the power to set a price higher than the market price. As a result, each company cannot maximize its profit by increasing or decreasing the price charged. Conversely, price-makers have the market power to influence prices.
Which of the following is characteristic of a competitive price taker market there is free entry into and exit from the market?The correct answer is option c. Firms can exit and enter the market freely. A perfectly competitive market is a theoretical market where firms can enter and exit the market freely or without cost. Due to this, the market structure has a large pool of sellers or firms competing to sell identical goods and services.
Which of the following are the characteristics of a competitive market?Characteristics of a competitive market. Focus on profit. ... . Diminishing supply. ... . Consumer rivalry. ... . Exclusion or inclusion. ... . Healthy margins and the ability to charge. ... . Informative for the customer. ... . Fewer time delays. ... . Reduced external influences.. |