ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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2-5
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Many
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None of the above
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Detailed explanation-1: -In fact, the major result of the general equilibrium analysis is the fol-lowing: under certain conditions, a general equilibrium with two or more noncolluding firms per industry is perfectly competitive.
Detailed explanation-2: -Perfect competition is a market structure where many firms offer a homogeneous product. Because there is freedom of entry and exit and perfect information, firms will make normal profits and prices will be kept low by competitive pressures.
Detailed explanation-3: -Firms are said to be in perfect competition when the following conditions occur: Many firms produce identical products. Many buyers are available to buy the product, and many sellers are available to sell the product.
Detailed explanation-4: -Firms operating under conditions of perfect competition face the following characteristics: Knowledge is ‘complete’-producers and consumers have access to complete market knowledge. There are no barriers to entry or exit. There are infinite numbers of competitive firms.
Detailed explanation-5: -Large number of buyers and sellers. Homogenous product is produced by every firm. Free entry and exit of firms. Zero advertising cost. Consumers have perfect knowledge about the market and are well aware of any changes in the market. All the factors of production, viz. No government intervention. More items