GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Can be controlled
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Cannot be controlled
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Can be controlled within certain limit
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None of the above
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Detailed explanation-1: -In a perfect competition model, there are no monopolies. This kind of structure has a number of key characteristics, including: All firms sell an identical product (the product is a commodity or homogeneous). All firms are price takers (they cannot influence the market price of their products).
Detailed explanation-2: -In a market characterized by perfect competition, price is determined through the mechanisms of supply and demand. Prices are influenced both by the supply of products from sellers and by the demand for products by buyers.
Detailed explanation-3: -Firms in a perfectly competitive market are all price takers because no one firm has enough market control. Unlike a monopolistic market, firms in a perfectly competitive market have a small market share. Barriers to entry are relatively low, and firms can enter and exit the market easily.
Detailed explanation-4: -In perfect competition, any profit-maximizing producer faces a market price equal to its marginal cost (P = MC). This implies that a factor’s price equals the factor’s marginal revenue product.