Perfect competition Flashcards

1
Q

Characteristics of perfectly competitive market structure

A
  • Many buyers and sellers
  • Each firms selling homogeneous goods and services (Identical g&s) therefore firms are price takers (They have no ability to set their own prices) if a new firm enters the market they have to set same prices as all competitors
  • No barriers to entry/exit
  • Perfect information (Consumers know about prices and quality in the market/Producers know about Prices, Technology and costs in market)
  • Firms are profit maximisers (Firms produce where MC=MR)
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