Unimpeded flow of resources between alternative uses i.e., resources are No firm can charge more, and no consumer can pay less than theĮntry and exit from the market is free for both consumers and Producers possess perfect knowledge about price and quality. Producers respond and adjust only to market signals. Sales or purchases by any buyer or seller are small relative to theīuyer or seller can affect price or quality, i.e., no one exercises market Large number of both producers and consumers. The product of different firms is indistinguishable, one fromĪnother, in terms of price, quality and product differentiation.Ĭonsumers have no reason to prefer the product of one firm over Firms have no reason to favor one consumer over another. Perfect competition fully satisfies the following four External Economies, Changing Taste & Technology
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