ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In economics, perfect information (sometimes referred to as “no hidden information") is a feature of perfect competition. With perfect information in a market, all consumers and producers have complete and instantaneous knowledge of all market prices, their own utility, and own cost functions.

Detailed explanation-2: -Perfect information is when every market participant has complete information. Imperfect information is when either the buyer or the seller has incomplete information. Perfect information exists in a perfectly competitive market. Imperfect information may exist in a monopoly, oligopoly, or monopolistic competition.

Detailed explanation-3: -In economic theory, perfect competition occurs when all companies sell identical products, market share does not influence price, companies are able to enter or exit without barriers, buyers have perfect or full information, and companies cannot determine prices.

Detailed explanation-4: -The term imperfect information simply means that the buyers and/or sellers do not have all the information necessary to make an informed decision. Asymmetric information is the condition where one party, either the buyer or the seller, has more information about the product’s quality or price than the other party.

Detailed explanation-5: -Perfect knowledge implies that both buyers and sellers are fully informed about the market price. Therefore, no firm is in a position to charge a different price and no buyer will pay a higher price. As a result, a uniform price prevails in the market.