State main features of perfect competition.
Understand the Problem
The question presents an exam question paper with various economic concepts and asks about the key features and definitions related to the subjects within. It includes topics such as consumption, investments, balance of payments, and market structures.
Answer
Large number of buyers and sellers, homogeneous products, free entry/exit, perfect information, price takers, efficient resource allocation.
The main features of perfect competition are:
- Large number of buyers and sellers.
- Homogeneous products.
- Free entry and exit.
- Perfect information.
- Price takers (no control over prices by individual firms).
- Efficient resource allocation.
Answer for screen readers
The main features of perfect competition are:
- Large number of buyers and sellers.
- Homogeneous products.
- Free entry and exit.
- Perfect information.
- Price takers (no control over prices by individual firms).
- Efficient resource allocation.
More Information
Perfect competition is a theoretical market structure used as a benchmark against which markets are compared. It ensures optimal allocation of resources.
Tips
A common mistake is confusing perfect competition with monopolistic competition, where products are not identical.
Sources
- Characteristics of Perfect Competition - study.com
- Perfect Competition - Definition, Example, Price-Takers - corporatefinanceinstitute.com
- Perfect Competition Market: Meaning, Features and Revenue Curves - geeksforgeeks.org
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