Perfect Competition

Perfect competition is a market structure characterized by a large number of buyers and sellers of essentially the same product. Each market participant is too small to influence market prices. Individual buyers and sellers are price takers. Firms take market prices as given and devise their production strategies accordingly. Free and complete demand and supply information is available in a perfectly competitive market, and there are no meaningful barriers to entry and exit. As a result, vigorous price competition prevails. Only a normal rate of return on investment is possible in the long run. Economic profits are possible only during periods of short-run disequilibrium before rivals mount an effective competitive response.

Was this article helpful?

0 0
Your Retirement Planning Guide

Your Retirement Planning Guide

Don't Blame Us If You End Up Enjoying Your Retired Life Like None Of Your Other Retired Friends. Already Freaked-Out About Your Retirement? Not Having Any Idea As To How You Should Be Planning For It? Started To Doubt If Your Later Years Would Really Be As Golden As They Promised? Fret Not Right Guidance Is Just Around The Corner.

Get My Free Ebook


Post a comment