What are the characteristics of pure competition?
Understand the Problem
The question is about the concept of pure competition in economics, specifically focusing on its characteristics. The extracted information discusses how numerous independent firms sell identical products and the implications of this market structure.
Answer
Large number of firms, homogeneous products, price-taking, no entry/exit barriers, no advertising.
Characteristics of pure competition include: a large number of independent firms, homogeneous products, price-taking behavior, no barriers to entry or exit, and no competition in advertising or sales promotion.
Answer for screen readers
Characteristics of pure competition include: a large number of independent firms, homogeneous products, price-taking behavior, no barriers to entry or exit, and no competition in advertising or sales promotion.
More Information
Pure competition is a theoretical market structure where all firms sell identical products, allowing consumers maximum choice and price stability, as no single firm can influence the market.
Tips
Common mistakes include confusing pure competition with monopolistic competition. Unlike monopoly, firms in pure competition cannot influence prices.
Sources
- Pure Competition: Definition, Characteristics and Examples - Indeed - indeed.com
- Pure Competition - Economics Online - economicsonline.co.uk
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