ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Pure or perfect competition is a market structure defined by a large number of small firms competing against each other. A single firm doesn’t have significant marketing power, and as a result, the industry produces an optimal level of output because firms don’t have the ability to influence market prices.

Detailed explanation-2: -Pure Competition Is Best for the Consumer From the consumer point of view, pure competition is the best type of market, because it gives consumers the greatest consumer surplus and maximizes total surplus for the economy.

Detailed explanation-3: -Basic economic theory demonstrates that when firms have to compete for customers, it leads to lower prices, higher quality goods and services, greater variety, and more innovation.

Detailed explanation-4: -One notable feature of perfect competition is low profit margins. Since all consumers have access to the same products, they naturally gravitate towards the lowest prices. Firms cannot set themselves apart by charging a premium for higher-quality products and services.