Computer Science

PERFECT COMPETITION DEFINITION: Perfect contention is a foodstuff structure characterized by a complete absence of aspiration among the man-to-man firms. Thus perfect competition in sparing theory has a meaning diametrically opposite to the chance(a) use of this term. In practice businessmen use the intelligence agency competition as synonymous to rivalry. In theory, perfect competition implies no rivalry among firms. 1.ASSUMPTIONS: The model of perfect competition is ground on the following assumptions. Large members of sellers and buyers: The industry or trade includes a large number of firms (and buyers), so that each individual firm, however large, supplied only as a small section of the total quantity offered in the market. The buyers are in any case many so that no monopsonistic power stern affect the operative of the market. Under these conditions each firm alone cannot affect the wrong in the market by changing its output. Product homogeneity: The industry is defined as a group of firms producing a homogeneous product. The technical characteristics of the product as well as the services associated with its sale and delivery are identical. There is no way in which as buyer could divers(prenominal)iate among the products of different firms.

If the product were differentiated the firm would have some ingenuity in setting its price. This is ruled out ex hypothesi in perfect competition. The assumptions of large numbers of sellers and of product homogeneity mention that the individual firm in pure competition is a price taker, its demand curve is infinitely elastic, indicating that the firm can sell any amount of output at the regular market price. The demand curve of the individual firm is also its average revenue and its marginal revenue curve. Free gate and exit of firms: There is no barrier to entry or exist form the industry. Entry or exit whitethorn take time, but firms have freedom of movement in and out of the industry. This assumption is supplementary to the assumption of... If you want to remove a full essay, order it on our website: Orderessay

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