Perfect competition, Managerial Economics

Perfect Competition

 The model of perfect competition describes a market situation in which there are:

i.         Many buyers and sellers to the extent that the supply of one firm makes a very insignificant contribution on the total supply.  Both the sellers and buyers take the price as given.   This implies that a firm in a perfectly competitive market can sell any quantity at the market price of its product and so faces a perfectly price elastic demand curve.

ii.         The product sold is homogenous so that a consumer is indifferent as to whom to buy from.

iii.         There is free entry into the industry and exit out of the industry.

iv.         Each firm aims at maximising profit.

v.         There is free mobility of resources i.e.   perfect market for the resources.

vi.         There is perfect knowledge about the market.

vii.         There is no government regulation and only the invisible hand of the price allocates the resources.

Posted Date: 11/28/2012 5:02:43 AM | Location : United States







Related Discussions:- Perfect competition, Assignment Help, Ask Question on Perfect competition, Get Answer, Expert's Help, Perfect competition Discussions

Write discussion on Perfect competition
Your posts are moderated
Related Questions
SHORT RUN OUTPUT AND PRICE In monopolistic competition, it's the product differentiation that permits its price without losing sales.  Due to brand loyalty consumers will c

Search and Matching Model It  should  be  clear  to  you  fiom  the  earlier section  that  there  are  a  variety  of models under the rubric of  search theory.  In  this sec

The demand for good X is estimated to be:  where p x price of X in dollars M = personal disposable income in trillions of dollars per year P y = price of a competitive in do

Q. Evaluate Total Cost - Fixed and Variable ? Total cost (TC) of the firm is a function of output (q). It would increase with the increase in output, which is, it differs dire

a. Explain why the demand for a particular brand is more elastic than the demand for all cigarettes. If Lucky Strike raised its price by 1% in 1918, was the price elast

The Microeconomic objectives of government These are the policies which are concerned with the allocation and distribution of resources to maximize social welfare. 1. Allo


Concept of Central bank M.H. De Kock concept of central bank is superior to that of others as it is more inclusive. His long definition of central bank includes many of the imp

The Budget line and its economic interpretation The indifference curve shows us consumer preferences but it does not show us the situation in the market place.  Here the consu

a bus operates two routes,one to harare and another one to johanesburg.the company analyst estimated that the elasticity of demand for joburg is 0.9 while for harare is 2.the compa