If you're seeing this message, it means we're having trouble loading external resources on our website. Show If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked. Suggest a new Definition Proposed definitions will be considered for inclusion in the Economictimes.com Economy
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.
Related News
Which of the following is in perfect competition?Perfect competition is a type of market where there are large number of buyers and sellers who deals in homogeneous product due to which no individual unit is able to influence the price of the product and the firms have to quote the price that prevails in the market. Was this answer helpful?
Which of the following statements is true of perfect competition?Answer and Explanation: The correct answer is b. The firm cannot affect the market price for its good. In a perfectly competitive market, a single firm cannot influence the market price.
What is perfect competition Mcq?Perfect competition is a type of marketplace where multiple companies are selling the same product or service, and a large number of consumers are looking to purchase it.
Which is the best example of perfect competition?Therefore, agriculture is the best example of a perfectly competitive market.
|