Assumptions of Perfect Competition

A perfect competition is market structure where there are large number of buyers and sellers who are willing to buy or sell a product or service at a given price. A Mobile SIM card is an example of perfect competition where there are many companies which are there to sell these cards at a given price. Let’s look at some of the assumptions of perfect competition –

  1. Under perfect competition market structure there are large number of buyers as well as sellers for a given product or service.
  2. The price of a product or service is fixed and buyers who are willing to buy at that price can buy the product or service and sellers who are willing to sell the product or service at that price can sell it.
  3. The product or service which is being sold under perfect competition market structure is similar or Homogeneous and that is the reason why sellers do not have any control over the price of a product.
  4. Under perfect competition there are no entry and exit barriers which make it easy for companies to enter into the markets and sell the product or service.
  5. All the buyers and sellers have complete information about the product or service which is being sold in the market.

In real life situations perfect competition market is seldom found as above assumptions may not hold in markets all over the world.

0 comments… add one

Leave a Comment

Related pages

explicit cost implicit costtypes of factoring serviceswage push inflationmeaning of trial balancedisadvantages and advantages of communismdisadvantages of commodity moneywhat is complementary goodsstatutory liquidity ratio formulamerits and demerits of social mediaexamples of primary industryexplain liquidity ratioautocratic leader characteristicswhat is the difference between a debtor and a creditoradvantages and disadvantages of advertising on social mediahow to calculate crr and slrdefine complementary goodsperpetual sucessionbalance sheet vertical analysisdefinition centrally planned economydifference between macro and micro economya trial balance is prepared towhat are complementary goodswhat is the meaning of current liabilitiesdisadvantages of price floordisadvantages of bill of exchangedistinguish between job costing and process costingdisadvantages of barter systemintraday traderwhat is crr and slrslr in rbinet worth calculation formula for a companydifference between capital and revenue expenditure with examplesdisadvantages of target marketingpure competition market structurethree golden rules of accountingmarket skimming pricing examplewhat is an autocratic leadershipscarcity examples in economicsplanned economic system advantages and disadvantagescharacteristics of monopolistic competition pdfwhat is an unqualified audit opinionhorizontal analysis accountingwhat is penetration pricing strategywhat is consignor and consigneemarket skimming examplesdifference between bills receivable and accounts receivablefloating exchange ratesconvention of materiality in accountingadvantages and disadvantages of living in rural and urban areasadvantages of factoringdrawer draweeprepayment journal entriesearned but unbilled revenueexplain payback periodterm loan and overdraftadvantages and disadvantages of online bankingexample of systematic risk and unsystematic riskconsumer durable goods examplesmeaning of unclaimedmixed economy tagalogwhat is operating cycle in financeaccounting unearned revenueconsistency concept in financial accountingbackward integration strategy examplesadvantages of debentureconglomerate merger advantages and disadvantagesprepaid insurance journal entrydeferred revenue expenditurepenetration pricing examplediversifiable risk exampleunitary elastic demand examplewhat is a conglomerate in economicsdisadvantages of organisational structurecompare and contrast capitalist and socialist economiessubstitute goods examples economicscapital budgeting advantages and disadvantagesvertical and horizontal mergers