However, firms can also freely leave the market costlessly if they are making a loss due to no barriers to exit being present. Freedom of firms to enter and exit a market - any firm can enter the market to enjoy profits as there are no barriers of entry present.This creates a horizontal (perfectly elastic) demand curve as all products that firms produce and sell are perfect substitutes for each other. All firms sell a homogeneous products - the products that firms are selling are identical in terms of their product characteristics.No individual firm has significant market power to influence the market price - this outcome means that all firms are price takers and have to sell at the prevailing market price.Large number of buyers and sellers in the market.The assumptions that are required for perfect competition to hold are as follows: This market structure is a contrast to a monopoly market. Is a market structure that describes the conditions required for intense competition to take place amongst firms in an market.
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